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How major US stock indexes fared Friday 1/27/2023
Closing prices for crude oil, gold and other commodities
S&P 500   3,852.36
DOW   32,920.46
QQQ   296.26
Why Lucid Spiked Nearly 100% In One Day
The Next Big Crisis Is Here (Ad)
Ride These Railroad Stocks for Growth and Income
Is Buying an Aged Corporation a Good Idea?
Is This The End of Capitalism? (Ad)
MarketBeat Week in Review – 1/23- 1/27
Visa, L3Harris rise; Intel, Eastman Chemical fall
The Next Big Crisis Is Here (Ad)
How major US stock indexes fared Friday 1/27/2023
Closing prices for crude oil, gold and other commodities
S&P 500   3,852.36
DOW   32,920.46
QQQ   296.26
Why Lucid Spiked Nearly 100% In One Day
The Next Big Crisis Is Here (Ad)
Ride These Railroad Stocks for Growth and Income
Is Buying an Aged Corporation a Good Idea?
Is This The End of Capitalism? (Ad)
MarketBeat Week in Review – 1/23- 1/27
Visa, L3Harris rise; Intel, Eastman Chemical fall
The Next Big Crisis Is Here (Ad)
How major US stock indexes fared Friday 1/27/2023
Closing prices for crude oil, gold and other commodities
S&P 500   3,852.36
DOW   32,920.46
QQQ   296.26
Why Lucid Spiked Nearly 100% In One Day
The Next Big Crisis Is Here (Ad)
Ride These Railroad Stocks for Growth and Income
Is Buying an Aged Corporation a Good Idea?
Is This The End of Capitalism? (Ad)
MarketBeat Week in Review – 1/23- 1/27
Visa, L3Harris rise; Intel, Eastman Chemical fall
The Next Big Crisis Is Here (Ad)
How major US stock indexes fared Friday 1/27/2023
Closing prices for crude oil, gold and other commodities

Is C3.ai Stock a ChatGPT Artificial Intelligence Play?

Key Points

  • C3.ai has a $250 million artificial intelligence (AI) contract with Microsoft, backing ChatGPT creator OpenAI.
  • C3.ai provides enterprise AI services to Google Cloud and the U.S. Department of Defense, U.S. Department of Energy, the U.S. Air Force, and the U.S. Department of Health and Human Services.
  • Subscription revenue continues to grow at 26% YoY while revenues are growing at 7% YoY.
  • Consumption-based pricing model will make it easier to land new clients in a weakening economy and scale up as they use more services.
  • 5 stocks we like better than C3.ai

Is C3.ai Stock a ChatGPT Artificial Intelligence Play?

You've seen the headlines about the artificial intelligence (AI) platform ChatGPT being able to write term papers and articles in a matter of minutes. 2023 looks to be shaping up as the year of AI, thanks to the mainstream frenzy over platforms like ChatGPT.

After initially investing $1 billion, Microsoft Inc. (NASDAQ: MSFT) is considering investing an additional $10 billion into parent company Open.AI.

ChatGPT is also backed by Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk. The platform gained over a million users just five days after its launch. This has caused Alphabet Inc. (NASDAQ: GOOGL) investors concern that Google Chrome may face serious competition with AI platforms that can go beyond just searching and creating content, programs, poetry, articles, marketing materials, and conversations.

About C3.ai

The spotlight on AI is a boon to enterprise AI companies like C3.ai Inc. (NYSE: AI), which provides AI and internet of things (IoT) platforms enabling companies to customize and integrate AI and IoT applications at scale. C3.AI provides over 42 customizable pre-built applications for the healthcare, manufacturing, aerospace, chemicals, oil and gas, and energy industries, as well as for governments.

Incidentally, they have a $250 million contract with Microsoft and also work with Google Cloud. Amazon.com Inc. (NASDAQ: AMZN) AWS remains its most extensive installed base. Shares have decreased dramatically since their post-IPO highs of $183.90 on Dec. 1, 2020.

Is C3.ai Stock a ChatGPT Artificial Intelligence Play?

Breakout of Weekly Descending Triangle

AI shares have been in a weekly descending triangle since peaking at $23.58 in August of 2022 to put in a swing low bottom and triangle lower trendline at $10.16. The weekly stochastic has been suppressed under the 20-band oversold line since September 2022.


After triggering the weekly market structure low (MSL) buy signal on the $11.54 breakout, shares were above to test the falling trendline at $13.02 in early January.

The weekly stochastic mini pup bounce through the 20-band enabled AI shares to breakout through the falling triangle trendline on a second MSL trigger at $13.02. Shares overshot the weekly 20-period exponential moving average (EMA) resistance at $13.49, followed by the weekly 50-period MA resistance at $16.81.

This may be shaping up for more important follow-through if shares can hold above the second MSL trigger level. Pullback support sits at the $13.02 MSL trigger, $12.65, $11.54 MSL trigger, $10.60, and $10.16 swing low.

Consumption-Based Pricing Model is Right for the Economic Climate

The Company has transitioned from a subscription-based to a consumption-based pricing model. This enables the Company to close new clients easier since there isn't a multi-million dollar upfront cost.

The smaller investment enables Companies to be onboard more accessible during harsh economic climates where tech companies are laying off thousands of employees at a time. It provides more effortless closing of new clients and longevity and scaling of existing clients.

Competitive Advantage

What sets C3.ai apart from competitors is its flexibility to operate with the most complex enterprise software applications. The Company competes with UiPath Inc. (NYSE: PATH), Palantir Technologies Inc. (NYSE: PLTR), and International Business Machines Corp. (NYSE: IBM).

It has various government contracts with the U.S. Department of Energy and the U.S. Department of Health and Human Services. It also has a $500 million five-year transaction agreement with the U.S. Department of Defense. Some of their well-known publicly traded clients include Exxon Mobil Corp. (NYSE: XOM), Pfizer Inc. (NYSE: PFE), and insurance giant American International Group Inc. (NYSE: AIG).

Earnings Beat

On Dec. 7, 2022, C3.ai released its fiscal second-quarter 2023 results for the quarter that ended in October 2022. The Company reported an earnings-per-share (EPS) loss of (-$0.11) versus a loss of (-$0.16) consensus analyst estimates, an $0.05 beat.

Revenues grew 7.1% year-over-year (YoY) to $62.41 million, beating analyst estimates of $60.81 million. Subscription revenues grew 26% YoY to $59.5 million. GAAP profit was $41.7 million indicating a 67% gross margin.

The remaining performance obligations (RPO) were $417.3 million. The Company had $858.8 million in cash and cash equivalents. Completed contracts rose 100% to 25, with an average contract size of $800,000, down from $19 million annually due to the new pricing model, which will increase smaller transactions.

Downside Guidance 

C3.ai provided fiscal Q3 2023 revenue guidance in line, coming in between $63 million to $65 million versus $66.82 million consensus analyst estimates. The Company sees fiscal full-year 2023 revenues between $255 million to $270 million versus $261.04 million analyst estimates.

C3.ai CEO Tom Siebel commented, “It was a solid second quarter, with subscription revenue growing 26% year over year. We made substantial progress ramping up our consumption-based sales motion effort, which has been well received by our customers, partners, and sales organization. We expect consumption-based sales to substantially contribute to growth in forthcoming quarters.”

Should you invest $1,000 in C3.ai right now?

Before you consider C3.ai, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and C3.ai wasn't on the list.

While C3.ai currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
C3.ai (AI)
1.5045 of 5 stars
$17.77+17.8%N/A-7.97Hold$15.33
Microsoft (MSFT)
3.1636 of 5 stars
$248.16+0.1%1.10%27.57Moderate Buy$283.09
Alphabet (GOOGL)
3.1999 of 5 stars
$99.37+1.9%N/A19.73Moderate Buy$132.20
Amazon.com (AMZN)
3.1823 of 5 stars
$102.24+3.0%N/A93.84Moderate Buy$145.41
Tesla (TSLA)
2.731 of 5 stars
$177.90+11.0%N/A49.10Hold$215.51
UiPath (PATH)
1.9054 of 5 stars
$15.28+4.9%N/A-22.81Hold$17.97
Pfizer (PFE)
3.0778 of 5 stars
$43.79-1.0%3.75%8.42Hold$52.33
Exxon Mobil (XOM)
2.3714 of 5 stars
$115.61-1.8%3.15%9.44Moderate Buy$114.35
American International Group (AIG)
3.1317 of 5 stars
$63.33-1.0%2.02%3.77Moderate Buy$65.08
Palantir Technologies (PLTR)
2.2548 of 5 stars
$7.55+4.3%N/A-26.96Hold$9.77
International Business Machines (IBM)
2.4411 of 5 stars
$134.390.0%4.91%76.36Hold$142.73
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Jea Yu

About Jea Yu

Contributing Author: Trading Strategies

With over 20 years of active participation and analysis of the US equities, options and futures markets, Mr. Yu brings fresh insights into the workings of the financial markets. He has published four books by esteemed publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. His brainchild, the Underground Trader, was voted Forbes Best of the Web for four consecutive years under the active trader category. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls from New York to Las Vegas. He has been quoted and featured in USA Today, Wall Street Journal, Traders Magazine and the Financial Times and various trade publications like Stocks & Commodities, Active Trader and Online Investor. Mr. Yu has a B.A. in Liberal Arts and minor in Business Administration from the University of Maryland.
Contact Jea Yu via email at JeaYu21@gmail.com.

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