Artificial intelligence (AI) has already made an impact on the world. From AI-powered robots to AI-driven cars, it is already changing our lives and work. C3.ai’s (NYSE:AI) AI algorithms can optimize an organization’s operations by bridging the gaps between existing software infrastructure to create a better business model for your company. However, AI stock is down 64.46% in the last six months, making a case as a value play.
C3.ai provides a variety of tools and programs for enterprise customers. They help streamline business operations in the energy, industrial and government sectors. Global industry estimates have revealed that the AI software market will be worth over $126 billion by 2025. The overall AI market is expected to grow at an impressive rate. This includes automated updating tools, machine learning algorithms and robotic process automation.
Since its founding, the company has grown by leaps and bounds. Its latest earnings report displayed stellar numbers once again, emphasizing tremendous growth. Plus, with its stock price falling sharply, it becomes a viable value play. However, I believe that the stock needs to fall slightly further to come into the buy zone. As I write this article, shares are trading at a price-to-sales ratio of 6.65 times. It is incredibly low considering the all-time high, but it is still slightly higher than 6.47 times.
Investors Need a Better Price Point for AI Stock
Machine learning and automation are transforming the way companies run. A lot of processor power is freed up so that companies can focus on other aspects of their business. C3.ai can help enterprise and government customers optimize their operations by improving safety and transparency and reducing fraud — which is important for the energy and industrial sectors. It expects its revenue to rise by 38% in fiscal 2022 and 33% in fiscal 2023.
However, ballooning losses is the issue the company needs to tackle. GAAP net loss for the first nine months of fiscal 2022 went from $133.6 million in the previous year to $55.7 million as the company invested to acquire new customers. You can expect this from a company that is looking to grow aggressively. But for investors, they will want to wait for a better price point to invest in this company.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.