AI Stock Gains After 26% Plunge; Responds To Short Seller Allegations; Is AI Stock A Buy?
The stock of AI is surging and rising after a pullback. The fundamentals and technical analysis say that the stock is a good buy now.
C3.ai rose after the company responded in response to an allegation stating that the enterprise software had "serious disclosure and accounting issues." The shares had broken free of consolidation last week with a 31.02 listing, but plunged by 26% between Tuesday and Wednesday.
Kerrisdale Capital, a short seller, raised concerns about AI's margins and unbilled receivables with client Baker Hughes.
The company claims that unbilled receivables conform to the accounting practice, which is to recognize revenue in the current period, even if revenue is booked later. The company also said that the Baker Hughes contract's reference to gross margins is not supported by financial statements which do not include "customer specific" information.
The fall below the 50 day moving average is a warning to sell. AI stock is currently testing important levels and should be watched.
Artificial Intelligence is Growing Massively
This is much less than Cathie's prediction. Wood, in Ark Investment Management's report "Big Ideas 2023", sees AI as adding $200 trillion to GDP by 2030.
AI stocks have the first mover advantage and are promoting partnerships with Alphabet parent Alphabet, Amazon (AMZN), Microsoft(MSFT), Accenture(ACN), Baker Hughes BKR and others.
AI Stock Earnings Still in the Red
AI stock reported sales at $66.7 million for the last quarter. This is down 4% from $69.8 millions. It still exceeded the guidance of $63-$65m. AI reported a net loss of 6 cents per share, which is slightly better than last year's loss of 7 cents.
Thomas Siebel, CEO of the company, stated that "overall sentiment" appears to be improving compared to mid-2022. He sees profitability in fiscal year 2024.
The generative AI shares disclosed $789.8 millions in cash as a way to get through the "turbulence" of the equity market. This cash will be used to "invest in growth by investing in enterprise AI innovation and expanding sales."
AI has expanded its ties with Amazon Web Services for several industries including local government offices.
AI Stocks Surge on ChatGPT's Success
In February, the stock skyrocketed when users were able to use OpenAI's ChatGPT app, which uses artificial intelligence, to generate texts, emails, and even books. AI stocks will benefit from ChatGPT and other applications.
C3.ai offers enterprise AI applications, but not for consumers. C3.ai can benefit from the consumer apps such as ChatGPT, because they can be integrated with the platform.
In just two months, the ChatGPT app surpassed popular apps such as TikTok or Instagram in terms of monthly active users. OpenAI and Microsoft's (MSFT) ChatGPT partnership uses natural language to help users write emails, code and find answers to daily questions.
The Redwood City-based company creates AI-enabled applications that can serve different purposes. Software can improve network reliability, detect fraud, balance inventory and demand, solve supply chain problems, and increase energy efficiency. It can help with anti-money launder and customer interface.
C3.ai's products are ideal for enterprise CRM systems that automate to reduce errors and costs.
AI Stock IPO
AI stock opened at $42 per share on December 2020's first day of listing.
In less than two weeks, the stock price jumped from 11,19 dollars at the end 2022 to 30,92 dollars earlier this month. The Composite Rating is 71, which is below the desired level of 90. The Composite Rating is clearly affected by the low 44 EPS rating. The 98 Relative strength Rating is a testament to the stock's performance compared to other stocks in IBD's database.
It has a mediocre "C-" Accumulation/Distribution Rating and mutual funds own only 34% of shares, according to IBD MarketSmith.
Stocks with a strong record of earnings and sales growth, which offer a clear point to buy from the base are good picks according to CAN SLIM's investment strategy. AI stock broke out of its base after the news. Its earnings are still under review.