What Happened:
Shares of artificial intelligence (AI) software company C3.ai (NYSE:AI) jumped 5.56% in the pre-market session after the company revealed in a press release that fourth-quarter revenue and operating income are expected to exceed the previous guidance and Consensus. Free cash flow is also expected to be strong and positive, ahead of analysts' expectations for continued cash burn. This marks a rare quarter of cash inflow. Management provided some updates on the AI market, noting that "Overall business environment for enterprise AI is more active than we have seen since the company's inception and seems to be accelerating. Interest in applying predictive analytics to business processes has never been greater. This manifested in significantly increased business activity at C3 AI. During the quarter, we closed 43 deals, including 19 pilots that were initiated in Q4 FY 23." Given the impressive guidance and the positive momentum in the AI sector, the market is expected to react favorably to the results.
What is the market telling us:
C3.ai's shares are very volatile and over the last year have had 68 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was about one month ago, when the company dropped 14.4% on the news that short seller, Sahm Adrangi of Kerrisdale Capital, sent a letter to Deloitte & Touche, conveying worries about alleged accounting problems at the firm.
C3.ai is up 102% since the beginning of the year, but at $22.45 per share it is still trading 33.7% below its 52-week high of $33.87 from April 2023. Investors who bought $1,000 worth of C3.ai's shares at the IPO in December 2020 would now be looking at an investment worth $242.29.
Is now the time to buy C3.ai? Access our full analysis of the earnings results here, it's free.