AI stock C3.ai tumbles 20% on weak forecast; Wedbush's Ives sees a buying opportunity

Investing.com -- C3.ai (NYSE: AI) shares traded 20% lower in pre-market after the AI software firm offered weaker-than-expected guidance.

The company also reported fiscal fourth-quarter results Wednesday that were better than feared as growing demand for enterprise AI applications bolstered new business wins.

The AI software maker reported an adjusted loss of $0.13 on revenue of $72.4 million, topping estimates for a loss of $0.17 on revenue of $71.29M.

The better-than-feared loss for the quarter comes as increasing market demand for enterprise AI led to a "substantial increase in opportunities and shorter sales cycles," the company said.

In Q4, the company closed 43 agreements, including 19 pilots, with the number of qualified enterprise opportunities targeted for closure within 12 months in its sales pipeline more than doubling in the past year. The average sales cycle for agreements in Q4 was 3.7 months, down from 5 months a year earlier.

Looking ahead to fiscal 2024, the company now expects an adjusted loss in a range of $50.0M to $75.0M on revenue of $295.0 to $320.0M. Analysts were looking for $317M in full-year sales.

For fiscal Q1, adjusted losses from operations were guided in a range of $25.0M to $30M on revenue of between $70M to $72.5M. Analysts were forecasting Q1 revenue of $71.6M.

Following the FQ4 earnings report, the AI stock earned both a downgrade and an upgrade. DA Davidson analyst Gil Luria cut the rating to Neutral from Buy following the recent run-up in shares. C3.ai stock is up more than 200% year to date, riding strong investor demand for artificial intelligence-linked stocks.

"We believe C3.ai is on track for 2H24 acceleration based on momentum driven by generative AI demand, which is now more properly reflected in the share price," Luria wrote in a note.

On the other hand, Wedbush analyst Daniel Ives upgraded the stock to Outperform from Neutral with the price target more than doubled to $50 per share.

"While it will be a bumpy road, we believe c3 has turned a corner and is ready to now capitalize on the $800 billion AI transformational opportunity over the next decade with use cases increasing across the board and the company in a unique position to help lead the charge and monetize this looking ahead the next 12 to 18 months," Ives said.

Additional reporting by Senad Karaahmetovic

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