AI Stock’s Secular Growth and Attractive Valuation Makes it Enticing
C3.ai (NYSE:AI) is a company that has created an Artificial Intelligence-centric platform for enterprise software. The company provides a platform that you can use to create and deploy different applications. C3.ai is not just one of the many companies trying to use AI in their products. They are one of the few that have succeeded in doing so. That is why AI stock is a can’t-miss opportunity.
C3.ai’s products are designed to automate any business process, from marketing to operations and everything in between. The versatility of their AI-first approach ensures that every customer will find a specialized solution for their unique needs. The company has a vast array of clients, but has also been successful with its small professional services business. In turn, the long-term prospects for the company appear to be extremely good.
Inflation rates are high, and Federal Reserve wants to control, which is not good for the growth stocks. Though growth stocks have done well in previous years, do not abort ship because it can bounce back from this slump. C3’s product portfolio is in high demand for many different businesses. Its operations are important, and its sales have been good so far. C3.ai is a good company to invest in for the next few years, even though the macroeconomic environment or sector is at risk for uncertainty.
Rising Growth and Adoption
Automation is a revolutionary change that will affect all industries and jobs. It will increase the economy’s growth, and it will change the way we do business.
There is a lot of discussion about how automation will affect our jobs and our economy. The truth is that we don’t know for sure what the future holds for us, but one thing is certain — things are going to change drastically in the next decade or two. The automation of various tasks has led to more efficient business operations, which means more time is spent developing new products and services. That’s because fewer human errors are involved in these processes, which means that businesses can be more confident that they will not be wasting their investments.
The automation revolution has already begun, and it’s not slowing down anytime soon. Automation has been around for decades, but it’s only recently that we’ve seen its adoption increasing at an exponential rate.
Therefore, the stock market is also taking notice. Investing is all about balance. It would help if you had a well-balanced portfolio of different stocks so that you are not putting all your eggs in one basket. Investing in tech companies may be lucrative, but it’s also risky because they are more volatile than other types of companies. You should invest in future-oriented companies for the long term so that you can maximize your returns without taking too much risk on any one company or industry.
If your portfolio is well-rounded, you shouldn’t have any problem with AI stock. C3.ai is expanding in terms of its prospects. Industries are benefiting from this company’s advanced technology. Investors can find C3.ai for a great price today. I’m sure these shares will make them plenty of money in the future.
AI Stock Gets Hit by Latest Earnings Report
Perhaps the main reason AI stock has not done well recently is its latest earnings report. AI stock precipitously dropped after their latest financial reports were less than ideal. At least one downgrade and a host of ratings cut followed. C3.ai reported impressive growth for second quarter, with a 32% increase in subscriptions from last year. This is great news for the company’s investors but slightly lower than expectations from analysts on Wall Street.
Overall revenue was $58.3 million, up 41% from a year ago and just above the company guidance range of $56 million to $58 million. Revenue also exceeded the Wall Street analyst consensus at $56.9 million. The company now has 104 customers, up 63% from a year ago.
On a non-GAAP basis, the company’s earnings per share were 23 cents in the last quarter. This is an improvement over their projected profit of 28 cents on a GAAP basis.
The company estimates a January quarter revenue of $66 million-68 million while projecting a $26million-30 million loss from operations. For the April 2022 fiscal year, we expect revenues to be between $248 million and $251 million. The company expects a non-GAAP loss of between $100 million and about $108 million. While we’re excited about C3’s potential, investors will be focused on digesting the Q2 numbers and waiting to see if there is a rebound in bookings come Q3.
There was a lot of chatter about the current level of performance obligations, which were $465.5 million, up 74% from last year and 60% higher than the previous quarter. However, the strong numbers are partly due to an expansion of its relationship with oil service company Baker Hughes.
Bottom Line
Analysts are not upgrading the stock price partly due to the current macroeconomic environment. However, C3.ai has been performing well lately. A good thing about C3.ai is that the business has a high gross margin. This is because they’re an AI-based enterprise software company that operates in a niche market.
The company’s expenses are mostly for admin and tech costs, which are relatively low. The best part of the company is their subscription foothold, they have a great client roster. Financially speaking, they are in great shape. The low levels of operational costs are a good sign for investors. They show that income isn’t being hit hard and that budgets remain manageable.
The industry has various macroeconomic concerns, but the market is still very young. Investors will have to learn how to value AI companies before speculating on their prospects. The tech future doesn’t look great right now. Rising rates and the Fed holding off on bond-buying fed balance sheet tightening have hurt tech stocks, but I think this tech stock will be successful in the future if we wait for these things to go away.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. You can check out his analysis on InvestorPlace and TipRanks.
