Is C3.ai a Top AI Stock to Buy on the Dip?

2 months ago 19

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Keithen Drury, The Motley Fool

Tue, Apr 8, 2025, 4:00 AM 4 min read

C3.ai (NYSE: AI) was 1 of the astir fashionable AI investments erstwhile the AI concern question started successful aboriginal 2023. While it saw a drawdown aboriginal that year, it reached different consequent highest successful December 2024, erstwhile the banal astir deed $43 per share. The banal has since crashed and is present down astir 50% from its all-time highs.

That's a large tumble successful a abbreviated magnitude of time, but is it capable to warrant taking a presumption successful this AI player?

C3.ai is focused connected providing pre-built AI applications that clients tin plug and play successful assorted scenarios. Its scope is rather broad, arsenic its Q3 FY 2025 booking (ending Jan. 31) was 24% successful nonrecreational services, 24% successful national and defence clients, 15% successful energy, 8% successful healthcare, and 9% successful precocious technology, among galore different sectors.

So, there's intelligibly a wide usage lawsuit for C3.ai's products, and its lawsuit database is increasing ever larger. A cardinal country wherever C3.ai is making large advancement is successful its partnerships with immoderate of the large unreality computing players. C3.ai has a adjacent narration with Amazon (NASDAQ: AMZN) Web Services (AWS) and Microsoft (NASDAQ: MSFT) Azure to supply these turnkey AI solutions connected their networks.

C3.ai besides conducted 20 generative AI pilots successful Q3 with respective ample clients. While these are aviator programs, and determination are nary guarantees they volition beryllium awarded aboriginal business, it's a large motion that C3.ai is making inroads with imaginable clients.

All of this added up to what could beryllium considered a palmy Q3 for C3.ai, arsenic gross grew 26% twelvemonth implicit twelvemonth to $98.8 million, which is somewhat supra wherever absorption projected it would be. However, investors didn't absorption connected C3.ai's growth. Instead, they focused connected a monolithic occupation for C3.ai: profits.

With C3.ai being a increasing bundle institution focused connected the adjacent cutting-edge technology, investors are consenting to place its unprofitability arsenic it tries to seizure arsenic overmuch marketplace accidental arsenic possible. However, determination are limits to the investing community's graces, and C3.ai has often tested those limits.

C3.ai is incredibly acold from becoming profitable, and it hasn't made overmuch effort to amended its losses either.

Although this illustration may look similar C3.ai is trending successful the close direction, it inactive posts an operating nonaccomplishment astir adjacent to its revenue, which means it's spending astir doubly arsenic overmuch arsenic it brings in. However, this isn't a existent representation of its profitability, arsenic GAAP accounting rules necessitate companies to see stock-based compensation successful these figures.