Why Is C3.ai (AI) Stock Down 15% Today?

  • C3.ai (NYSE:AI) reported better-than-expected fiscal fourth-quarter results.
  • The company's guidance came in significantly below analysts' average outlook.
  • Two analysts had mixed views on AI stock in the wake of the results.
AI stock - Why Is C3.ai (AI) Stock Down 15% Today?

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C3.ai (NYSE:AI) reported better-than-expected fiscal fourth-quarter results yesterday afternoon, but AI stock is tumbling 15% because the company’s second quarter and full-year guidance came in significantly below analysts’ average estimates.

As I pointed out in a previous column: “C3.ai has created products that enable companies to easily harness AI for various purposes.” And with the use of artificial intelligence on the rise across multiple sectors, AI stock has investors’ attention.

C3.ai’s Q1 Earnings

The company’s revenue jumped 38% year-over-year to $72.3 million, versus analysts’ average outlook of $71.3 million. Moreover, the company reported a per-share loss of 21 cents, versus the mean outlook of a per-share loss of 34 cents.

However, for the current quarter, the firm expects its top line to be $65 million to $67 million. This is much lower than the Street’s average outlook of $74.4 million. Moreover, for its full fiscal year, C3.ai expects its revenue to come in at around $308 million to $316 million. This is compared with analysts’ average estimate of $333.9 million.

Two Analysts’ Reactions Were Mixed About AI Stock

Morgan Stanley analyst Sanjit Singh wrote that C3.ai’s results are “lumpy,” or inconsistent. This characteristic, along with an “uncertain macro [outlook] make it tougher to assess the stock’s risk/reward in the [near-term],” warned the analyst. Singh has an “underweight” rating on AI stock.

JMP Securities analyst Patrick Walravens reported that a number of deals which the company had expected to close last quarter are now expected to be signed in the future. On the other hand, however, he continues to believe that the company’s performance will eventually improve. He thinks that it has “an effective, scalable enterprise AI solution that solves problems” and alliances with large entities that can bear fruit in the longer term.

Walravens slashed his price target on AI stock to $28 from $59, but kept an “outperform” rating on the shares.

On the date of publication, Larry Ramer 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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.


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