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Every stock is a work in progress, and so is enterprise artificial intelligence firm C3.ai (NYSE:AI). Despite financial blemishes, the company’s growth potential shines through. In a landscape where AI demand burgeons, holding onto AI stock seems wise.
Tom Siebel, CEO of C3.ai, once emphatically stated that the impact of AI is enduring. As the AI age unfurls its might, is your investment portfolio geared to ride this wave? Securing some C3.ai shares is a straightforward way to ride the AI wave, provided one carefully assesses the hurdles C3.ai faces.
The Quest for Profitability at C3.ai
If profitability is your lodestar, C3.ai’s current financial standing may perturb you. Despite a robust 18% revenue surge year-over-year in the third quarter of fiscal 2024, the company is yet to achieve positive net income.
A snapshot of C3.ai’s financial trajectory reveals a pattern of deteriorating financial metrics over time:
- Q1 FY 2024: GAAP net loss of 56 cents per share; non-GAAP net loss of 9 cents per share; $809.6 million in cash, cash equivalents, and investments
- Q2 FY 2024: GAAP net loss of 59 cents per share; non-GAAP net loss of 13 cents per share; $762.3 million in cash, cash equivalents, and investments
- Q3 FY 2024: GAAP net loss of 60 cents per share; non-GAAP net loss of 13 cents per share; $723.3 million in cash, cash equivalents, and investments
Potential investors should weigh these financial challenges against C3.ai’s revenue uptrend. For a better fiscal outlook, C3.ai must curtail its expenditures while striving to bolster customer engagement and revenue streams.
AI Adoption: A Beacon for C3.ai Stock Soar
Amid concerns over C3.ai’s financial hurdles, it is crucial to acknowledge the transformative potential of industry-wide AI adoption. The AI realm is witnessing an exponential surge, akin to a tide lifting all vessels. AI is the buzzword at every tech gathering, underscoring the urgency for businesses to integrate AI into their products and services.
C3.ai stands as a linchpin in this AI ecosystem, poised to capitalize on the market’s burgeoning AI appetite. Forecasts hint at a colossal AI hardware and services market, set to reach $90 billion by 2025 – a massive leap from the $36 billion valuation in 2020. The projected 20% compound annual growth rate (CAGR) for this market till 2025 sets a promising stage for AI-centric entities like C3.ai.
Setting Sights on $50: The Attainable Summit for AI Stock
To echo Siebel, the AI force is far from transient. As more businesses embrace AI solutions, C3.ai is primed to harness the expanding AI hardware and services domain. While share price fluctuations are anticipated, it is unwise to stake all on C3.ai shares. Rather, a measured portfolio allocation towards AI stock, with a $50 price target, seems prudent. This goal aligns with the buoyant growth projections for the AI hardware and services sector.
After the $50 milestone is reached, a 3-fold or even greater ascent may be within grasp. Thus, staying invested in C3.ai carries promise and potential.
On the date of publication, David Moadel 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.
