C3.ai (AI.US) is one of the companies that has gained most strongly on the wave of growing interest in artificial intelligence. Compared to Nvidia or Microsoft, the company is very small, with a market capitalization of $3 billion by which it is regarded by traders as an 'aggressive bet' among companies developing AI. Today after the Wall Street session, the company will present its Q1 report - expectations around it are huge because the market wants confirmation of the quality of the business in the form of 'hard numbers' and comments from the still unprofitable company. Expectations are all the more exorbitant after the euphoric increases of recent days. Since the beginning of the year, the company's shares have risen nearly 200%.
- Wall Street expects C3.ai to report a loss per share of $0.17 on $71.32 million in revenue for Q1 2023. In the previous quarter, the loss was $0.21 per share, and revenue was higher than estimated at $72.32 million - projected results look downright suspiciously conservative
- Analyst consensus estimates a full-year loss of $0.46 per share for C3.ai, compared to $0.73 in 2022. Full-year revenue is expected to be $265.67 million, up 5.1% year-on-year.
Estimates around the company's finances seem even overly cautious looking at recent indications and information from Nvidia as well as the C3.ai board itself. This creates considerable room for a possible positive surprise. It's hard to compare 2022 with 2023 in terms of interest in AI by what a 5% increase in revenue would be rather a failure for the company. Wall Street's undervaluation may reflect an undervaluation on the part of the market, lower growth opportunities for the company or a limited ability to scale the business.
- C3.ai's main customers are large enterprises like Amazon and Alphabet (Google), as well as resource and defense companies including the U.S. Department of Defense Over the past month, C3.ai's shares have risen nearly 90% against a less than 3% rise in the S&P500;
- The company recently announced that a suite of its AI products has been made available for Google Cloud Marketplace. Management also expects positive cash flow in the coming quarters, indicating that the amount of cash (currently $800 million) on the balance sheet will finally increase (until recently it was 'burned through');
- The company has recently sought to change the company's business model, moving away from short-term subscription-based revenues to pricing based on separate transactions. In this way, the company wants to increase long-term revenues - by expanding its customer base and actively pricing on a customer-by-customer basis;
- CEO Thomas Siebel, who has led the company since its inception, indicated that demand for the company's generative AI is high from both current and future customers. Investors want the report to prove that the AI boom can bring C3.ai a powerful catalyst for growth and a faster path to profitability.
C3.ai (AI.US) shares on H4 interval. SMA100 and SMA200 after recent rally are again closer to 'golden cross' formation. Source: xStation5