C3.ai shares slide as revenue forecast fails to live up to AI hype

Guardforce AI

01/06/2023 12:07

June 1 (Reuters) - Shares of C3.ai Inc  AI.N  dropped
nearly 20% in premarket trading on Thursday after the AI
software maker's quarterly revenue forecast missed estimates,
dampening some of Wall Street's recent euphoria around AI-linked
stocks.
    Most other small-cap artificial intelligence (AI) stocks
fell after the disappointing outlook. AI analytics firm
BigBear.ai  BBAI.N , conversation intelligence firm SoundHound
AI  SOUN.O  and Thailand's security firm Guardforce AI  GFAI.O 
were down between 0.5% and 7.5%.
    C3.ai, one of the top beneficiaries of the AI boom sparked
by the viral success of ChatGPT, has seen its market value more
than triple in 2023. 
    A jaw-dropping forecast last week by Nvidia, the world's
most valuable listed semiconductor company, fueled C3.ai's rally
further, sending its shares to a near one-and-a-half-year high
on Tuesday.
    The midpoint of C3.ai's full-year revenue forecast was
$307.50 million, below Wall Street expectations of $317.1
million, according to Refinitiv data.
    The Redwood City, California-based company is experiencing a
slow down in revenue as a result of its turnaround to a
consumption-based pricing model, from a subscription business.
    The company, however, said it had received bookings from
diverse industries, benefitting from the strong AI software
demand and remained on track to post a profit by the end of
April 2024.    
    "We've been consistently bullish on the company's long-term
potential to capture enterprise demand for AI-powered
solutions... (but) we've just been cautious on timing,
particularly due to the fluid state of the financials as the
company shifts toward consumption pricing and positive EBIT
exiting FY24," Canaccord Genuity wrote in a note.
    At least four brokerages raised their price targets on the
company, lifting the median Wall Street target to $24, more than
double from three months ago, Refintiv data showed. Average Wall
Street rating was "hold".
    "We would like to see some of (the) underlying growth
drivers to translate to higher levels of revenue growth to get
more constructive on the stock," said Piper Sandler analyst
Arvind Ramnani.
    

 (Reporting by Medha Singh in Bengaluru; additional reporting by
Vansh Agarwal; Editing by Rashmi Aich)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs;))