Over the previous few weeks, firms have been reporting earnings for the fourth quarter and full calendar yr 2024. For many expertise traders, massive tech shares within the “Magnificent Seven,” in addition to rising gamers equivalent to Palantir Applied sciences, obtained a lot of the consideration throughout Wall Road.
With earnings season coming to a detailed, there are nonetheless a number of firms within the artificial intelligence (AI) race value watching. One firm typically in comparison with Palantir is a software program enterprise known as C3.ai (NYSE: AI).
The place to take a position $1,000 proper now? Our analyst workforce simply revealed what they consider are the 10 greatest shares to purchase proper now. Learn More »
On Feb. 26, C3.ai is scheduled to announce monetary outcomes for its fiscal third quarter (interval ending Jan. 31). Is C3.ai inventory a purchase earlier than it reviews earnings subsequent week? Let us take a look at some latest developments on the firm and analyze historic traits to assist us discover out.
C3.ai has some good issues going for it, however…
The chart illustrates C3.ai’s quarterly income traits over the past three years. Not solely is the corporate witnessing spectacular development, however its gross sales are literally accelerating — indicated by the steepening slope of the road.
AI Revenue (Quarterly) information by YCharts
A method C3.ai has been in a position to jump-start its income is thru a accomplice ecosystem. The corporate works intently with cloud hyperscalers equivalent to Microsoft, Alphabet, and Amazon, along with main consulting companies Booz Allen Hamilton and McKinsey & Firm.
Final quarter, over 60% of C3.ai’s enterprise got here by way of its accomplice community. Given hovering demand for AI purposes and an growing involvement from consulting companies serving to companies combine their AI platforms, I believe C3.ai is positioned to proceed benefiting from these companions.
Picture supply: Getty Photographs.
… the corporate has a protracted solution to go
Whereas C3.ai’s numerous partnerships have helped the corporate diversify its income base and speed up gross sales, the traits depicted within the chart beneath inform a unique aspect to the corporate’s story.
AI Net Income (Quarterly) information by YCharts
Regardless of fast development throughout the highest line, C3.ai stays unprofitable. The consistency of the corporate’s internet losses and unfavourable free money stream aren’t notably encouraging. Whereas many development shares will expertise durations of money burn, finally accelerating income ought to assist widen margins and finally result in profitability. Per the chart, that is not actually the case with C3.ai.
Given the corporate is materially smaller than its software program friends — particularly Palantir — and its lack of profitability, it is arduous to justify a compelling motive to purchase this inventory. Nonetheless, let’s assess some historic traits round C3.ai and its earnings reviews earlier than making a ultimate judgment.
Is C3.ai inventory a purchase proper now?
The chart illustrates C3.ai’s inventory motion over the past three years. As well as, I’ve annotated the chart to depict the corporate’s earnings reviews — as illustrated by the purple circles with the letter “E” within the center.
I see a reasonably clear development right here. It seems like C3.ai inventory usually begins to rise previous to reporting earnings — solely to fall instantly afterward. In my view, it is a inventory that traders need to like, however constantly are let down. What’s extra is that given its speculative nature, C3.ai comes throughout as extra of a inventory to commerce reasonably than personal.
In my eyes, it’s not value getting caught up in a momentum stock like C3.ai — there’s simply an excessive amount of threat. As an alternative, I might search for extra established gamers within the AI software program realm that characteristic a mixture of strong income development, constant profitability, and robust ahead steering. Sadly, C3.ai doesn’t meet these standards. For these causes, I might not purchase the inventory earlier than the corporate reviews earnings on Feb. 26.
Do you have to make investments $1,000 in C3.ai proper now?
Before you purchase inventory in C3.ai, take into account this:
The Motley Idiot Inventory Advisor analyst workforce simply recognized what they consider are the 10 best stocks for traders to purchase now… and C3.ai wasn’t one among them. The ten shares that made the minimize may produce monster returns within the coming years.
Think about when Nvidia made this checklist on April 15, 2005… in the event you invested $1,000 on the time of our suggestion, you’d have $823,858!*
Inventory Advisor offers traders with an easy-to-follow blueprint for fulfillment, together with steering on constructing a portfolio, common updates from analysts, and two new inventory picks every month. The Inventory Advisor service has greater than quadrupled the return of S&P 500 since 2002*.
*Inventory Advisor returns as of February 21, 2025
John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Palantir Applied sciences. The Motley Idiot has positions in and recommends Alphabet, Amazon, Microsoft, and Palantir Applied sciences. The Motley Idiot recommends Booz Allen Hamilton and C3.ai and recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
