Stay Away From This Red-Hot AI Stock
Shares of C3.ai (NYSE: AI) have surged this year, swept higher by a wave of hype surrounding artificial intelligence technology. The rally is certainly not due to the company's results. Revenue is flatlining as C3.ai shifts from a subscription-based model to a consumption-based model, and losses are enormous. The company sells its AI application-development platform and its suite of AI applications to large enterprises, which means long sales cycles and hefty spending on sales and marketing.
The stock crashed on Thursday following a rough earnings report for the fiscal fourth quarter, which ended April 30. Revenue was unchanged from the prior-year period, net loss worsened, and the company guided for a sequential revenue decline in the first quarter of fiscal 2024.
"The interest in applying AI to business processes is more active than we've ever seen," reads C3.ai's earnings report. Despite this increased interest, the company expects sluggish revenue growth in fiscal 2024. C3.ai guided for full-year revenue of $295 million to $320 million, which represents growth of about 15% at the midpoint. Given the explosion in interest in AI and the fact that C3.ai's fiscal year is barely underway, that growth rate is underwhelming.
Source Fool.com
