If you hold shares of enterprise artificial intelligence company C3.ai (NYSE:AI) last year, you can congratulate yourself for raking in substantial returns. Now, in 2024, it’s time for a fresh AI stock analysis. After considering the risks and rewards, you’ll likely conclude that it’s not the right time to invest in C3.ai.
Don’t get the wrong idea. If you have a bullish outlook on the AI-technology market generally, it could make sense to invest in C3.ai at some point. However, you’ll want to time your entry correctly and only buy C3.ai stock when it pulls back to a more favorable price. Otherwise, you might end up holding a heavy bag for a while.
AI Stock: It’s Hard to Justify the Price
Again, I won’t begrudge the good fortune of C3.ai’s investors last year. Impressively, AI stock catapulted from $11 to $29 last year. Does it really make sense that C3.ai shares should be so much more expensive, though?
Let’s be perfectly honest. C3.ai’s shareholders got lucky in 2023. The company didn’t report any profitable quarters last year – or in 2022 or 2021, for that matter. In the company’s most recently reported quarter, C3.ai’s revenue increased 17% year over year.
Sure, 17% revenue growth is pretty good, but it doesn’t justify last year’s extreme move in AI stock. More likely, the moonshot was based on the market’s assumption of epic future growth on the generative-AI market overall.
In other words, C3.ai stock may have moved too far, too fast based on AI-market hype rather than hard facts. Now, let’s move on to the current year, so far. Does C3.ai have any exciting announcements to share with investors?
C3.ai: No News Isn’t Good News
If you’re thinking about investing in C3.ai stock, be sure to check the company’s news pages regularly. Just don’t expect frequent, exciting updates, though.
In December of 2023, C3.ai didn’t have anything important to report except the company’s quarterly results, which I already mentioned. In January of this year, there was little more than radio silence from C3.ai.
Granted, C3.ai did post a blog entry/article in January, called “Generative AI for the Department of Defense: The Power of Instant Insights.” It’s not a breaking news story with any new, actionable data about C3.ai.
Frankly, C3.ai’s stakeholders should insist on more meaningful, data-infused, company-specific updates from the company. They should demand hard evidence to justify AI stock’s current price. Otherwise, there’s no reason to be a buyer now.
AI Stock Analysis: Pick Your Buy Price and Wait
My AI stock analysis differs somewhat from that of InvestorPlace contributor Thomas Niel. He stated that there are better options out there, and seemed to advise against investing in C3.ai.
I actually like C3.ai’s growth prospects for the long term, but I want overeager investors to be patient. Keep watching for updates from the company, which will hopefully be more frequent and data-rich.
Finally, I recommend improving the reward-to-risk balance by waiting for C3.ai stock to drop below $20. Then, you can hit the “buy” button with more confidence.
On the date of publication, David Moadel 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.