Why You Must Invest in C3.Ai Right Now?

Last Updated on December 10, 2023 by SPN Editor

Currently, C3.ai stock price is $28 which is trading 81% below its peak price of $161, a milestone it achieved shortly after its initial public offering in 2020. Despite this, C3.ai shares have seen a twofold increase this year, a testament to the highly favorable progress within C3.ai’s operations and the right time to invest in C3.ai.

Established in 2009, C3.ai (AI 8.65%) is a company dedicated to enabling businesses to leverage the potential of artificial intelligence (AI). It offers more than 40 AI applications that are both ready-made and customizable, catering to enterprises across various industries.

Thomas Siebel, the CEO of C3.ai, equates the AI opportunity to the advent of the internet or the emergence of the smartphone. A Goldman Sachs analysis suggests that this technology could enhance corporate profits by 30% in the coming decade.

The recent fiscal 2024 second quarter financial results (ended Oct. 31) of C3.ai indicate a significant surge in customer engagements and revenue growth, attracting businesses towards it.

Approximately 18 months ago, C3.ai chose to shift from a subscription-based revenue model due to lengthy deal negotiations, which made the acquisition and onboarding of new customers costly.

C3.ai now bills customers based on consumption, implying that businesses only pay for what they utilize, thereby offering them much more flexibility. However, this transition initially led to a deceleration in C3.ai’s revenue growth as it transitioned all of its existing customers to the new model.

The recent second quarter of fiscal 2024, represented by period 5 on the graph, is when sales are projected to escalate. In line with this prediction, C3.ai’s revenue soared by 17% during the quarter, reaching a record-high of $73.2 million. The trajectory of the consumption line suggests that growth is set to further accelerate.

Why You Must Invest in C3.ai?

C3.ai is currently incurring losses as it is heavily investing in growth and research and development. It reported a net loss of $69 million during Q2, but after accounting for one-off and non-cash expenses like stock-based compensation, that loss was reduced to a much smaller $15 million.

With $762 million in cash and marketable securities in its coffers, the company can sustain losses of this magnitude for the foreseeable future. However, it will eventually need to demonstrate its ability to generate positive earnings for investors if it wishes to witness a sustainable increase in its stock price.

Indeed, an increase in revenue growth could potentially steer C3.ai’s bottom line toward profitability, provided costs are kept constant. The rapid acceleration of customer engagements in recent quarters, coupled with the anticipated rise in consumption, suggests that this is a likely scenario.

Future Scope to Invest in C3.ai

C3.ai, a rapidly growing company in the field of artificial intelligence (AI), has made significant strides in expanding its customer base. The company’s AI applications are designed to serve a broad spectrum of industries. For instance, they provide valuable assistance to banks and financial institutions by helping them combat fraud and enhance their operational efficiency.

In the energy sector, C3.ai’s AI applications play a crucial role in aiding oil and gas giants. They help these companies in their efforts to reduce carbon emissions, a critical step towards environmental sustainability. Additionally, these applications assist in managing a vast array of equipment, enabling the prediction of catastrophic failures that could potentially cause significant environmental damage.

One of the key elements of C3.ai’s success is its robust customer acquisition strategy. This strategy includes forming joint-selling agreements with leading cloud computing companies such as Amazon Web Services (AWS), Microsoft Azure, and Alphabet’s Google Cloud. These partnerships not only broaden C3.ai’s reach but also enhance its ability to deliver cutting-edge AI solutions to a diverse range of customers.

In terms of customer engagement, C3.ai has shown impressive growth. The company engaged with a total of 404 customers, marking a remarkable increase of 81% from the same period in the previous year. This rapid expansion of its customer base is a testament to C3.ai’s effective strategies and the increasing demand for its AI applications across various industries.

Considering the internal and external factors previously mentioned, it will be a wise decision to invest in C3.ai which might be on the path of entering the most robust phase in its history. Consequently, it could be an opportune time to invest in C3.ai right now, especially given its current steep price ($28) from its all-time high.