C3.ai Stock: This AI Elevator Is Still Nowhere Near the Top

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However, some investors might find it off-putting that C3.ai isn’t profitable.

Is enterprise artificial intelligence specialist C3.ai (NYSE:AI) a company to watch in 2024? I’d say definitely yes, and investors should put at least a few shares of C3.ai stock in their portfolios for an extra AI-sector boost. You’ll thank me someday when the stock price is substantially higher.

But don’t just take my word for it. Not long ago, C3.ai passed a crucial test with flying colors as investors wondered whether the company could continue to grow its revenue. I’m not saying that C3.ai’s financials are perfect in every way, though, so let’s start with the bad news before moving on to the really great news about C3.ai.

I’ll just come right out and say it: C3.ai is an unprofitable company. This might bother some cautious investors, but let’s get the full story before making any judgments.

In the fourth quarter of fiscal 2024, which ended on April 30, C3.ai reported an adjusted earnings loss of 11 cents per share. That not a massively deep loss when the stock trades at around $30. Furthermore, when we discover how quickly and consistently C3.ai’s revenue is growing, you may forgive the company for being unprofitable.

I did observe, though, that C3.ai’s cost of revenue and operating expenses increased somewhat in Q4 FY2024 when compared to the year-earlier quarter. Hopefully, the company is willing and able to reduce its expenditures in the current and following quarters.

C3.ai CEO Thomas Siebel is a confident spokesperson for the company. He proclaimed that Q4 FY2024 was C3.ai’s “fifth consecutive quarter of accelerating revenue growth.”

Therefore, Siebel’s confidence is perfectly understandable and AI technology clearly isn’t just a passing fad. Impressively, C3.ai’s fourth-quarter fiscal 2024 revenue grew 20% year over year to $86.6 million.

Here’s the real kicker, though. Amazingly, C3.ai’s subscription segment revenue increased by 41% YOY to $79.9 million. That’s significant, since subscription revenue constitutes 92% of C3.ai’s total revenue.

“Demand for Enterprise AI is intensifying,” Siebel stated, and the company’s revenue growth seems to prove the CEO’s point. Siebel also observed, “The interest we are seeing in our generative AI applications is staggering.”

Investing in C3.ai is a simple way to achieve direct participation in the AI revolution of the 2020s. At the very least, you’ll get exposure to a business with proven revenue growth.

The major sticking point for some people might be the fact that C3.ai isn’t profitable. So, going forward, investors should keep tabs on C3.ai’s expenditures.

That said, it’s easy to see why C3.ai’s CEO is so confident about the company’s growth prospects. All in all, it makes a lot of sense to own at least a few shares of C3.ai stock this year.

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