It’s practically always good news when a company discloses an expanded collaboration with Amazon (NASDAQ:AMZN). So, investors in machine learning software specialist C3.ai (NYSE:AI) stock have every right to be confident.
Yet, it’s important to temper one’s confidence with wariness. You can certainly get pure-play exposure to the artificial intelligence space through AI stock, but there’s no need to go overboard. As always, proper position sizing can save financial traders from potential problems down the road.
Otherwise, you might end up becoming a victim of FOMO, or fear of missing out. Machine learning is in the headlines now, and it’s tempting to allocate too much capital toward any company with AI in its name, including C3.ai.
Granted, C3.ai is a premier machine learning specialist with public and private clients/partners. So, if you can avoid FOMO and invest in C3.ai sensibly, there could be a favorable reward-to-risk profile for the long term.
What’s Happening with AI Stock?
AI stock doubled during the first month and a half of 2023, bolstered by the attention that OpenAI’s ChatGPT chatbot brought to the machine learning space. All of a sudden, formerly under-the-radar companies like C3.ai were thrust into the spotlight on Wall Street.
Here’s where the FOMO concept becomes very useful. The last thing you want to be is a hype chaser. Don’t let the fear of leaving money on the table prompt you to buy too many C3.ai shares.
The idea is to start small, and think long-term. After all, C3.ai isn’t profitable yet, so there’s some risk involved. That’s why we’re giving AI stock a “B” rather than a full-on “A” rating.
C3.ai’s management envisions an “accelerated path to profitability,” and expects the company to “be operating profitably on a non-GAAP basis and be cash positive by the end of fiscal 2024.” So, relax and be patient if you’re investing in C3.ai.
Amazon Team-Up Benefits All Stakeholders
Most customers probably know Amazon as America’s biggest e-commerce company. However, the company is also a cloud king with its Amazon Web Services (AWS) business. Notably, C3.ai recently announced an expansion of its Strategic Collaboration Agreement (SCA) with AWS to deliver AI solutions.
As you may be aware, C3.ai already has big-time clients like the U.S. Air Force. In collaboration with AWS, C3.ai can continue to “solve customers’ critical business challenges across a variety of industries, including defense and intelligence as well as state and local government.”
The expanded agreement is truly a win-win for all stakeholders. C3.ai will have a prime opportunity to integrate its applications, “such as C3 AI Law Enforcement, with AWS services including Amazon Comprehend, and co-sell the C3 AI Platform and applications with AWS.”
Since AWS is a trusted name and C3.ai’s machine learning applications are best-in-class, C3.ai and Amazon can benefit from each others’ strengths. Meanwhile, the clients will have access to “tightly integrated suites of AI applications that leverage AWS services,” according to C3.ai Chief Product Officer Houman Behzadi.
What You Can Do Now
So, how can you jump into the trade while avoiding the FOMO? Owning AI stock can allow you to participate in C3.ai’s growth story. At the same time, starting small means you can build your position sensibly.
There’s always risk involved with emerging technologies, and machine learning is still in its early innings. Nevertheless, C3.ai is proving itself as a niche-segment leader. Plus, there are undeniable benefits to the company’s team-up with Amazon. Therefore, feel free to consider scaling into a reasonably sized share position in C3.ai.
On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.