C3.ai Stock: Should You Buy the Dip After an 85% Decline?

C3.ai, a tech stock that debuted in 2020, has fallen 84% from its all-time high. The company is growing slower than its competitors and losing money, making it a poor investment choice despite its lower valuation. C3.ai competes with Palantir Technologies and Databricks in the AI software market, and its disappointing performance suggests investors should look elsewhere.

C3.ai, a tech stock that debuted in 2020, has seen its stock price plummet 84% from its all-time high, leaving investors with significant losses. The company, which focuses on AI-centric software for enterprises, has been struggling to keep up with its competitors and has been losing money since its initial public offering (IPO) [1].

C3.ai's business model involves building AI-centric software tailored to meet the needs of various industries, such as oil and gas, transportation, and defense. The company has partnered with major cloud providers like Amazon Web Services (AWS) and consulting firms like McKinsey to drive sales of its analytics and management software. Despite these partnerships and the long runway for AI adoption, C3.ai has lagged behind its competitors in terms of revenue growth and profitability.

One of C3.ai's main competitors is Palantir Technologies, which generated $884 million in revenue last quarter, up 39% year over year, compared to C3.ai's $108.7 million in revenue, up 26% year over year [1]. Another competitor, Databricks, a private company, does $3.7 billion in revenue and sells a similar data intelligence platform. C3.ai remains a small player in the large software analytics and AI market.

A closer look at C3.ai's history reveals a pattern of name changes and shifts in focus, suggesting a lack of long-term product strategy. The company was originally founded as C3 to operate in the carbon market, then changed its name to C3 IOT, C3 Energy, and finally C3.ai to capitalize on the AI hype cycle. This apparent lack of focus has resulted in significant marketing and research spending, with the company reporting a net loss of $289 million while generating $389 million in total revenue last fiscal year [1].

Given the current AI hype cycle and the overvaluation of many AI stocks, C3.ai may appear to be a cheaper option compared to other AI stocks. However, its poor financial performance and lack of competitive advantage make it a risky investment. The company's net losses have not improved since going public, and there is no clear path to profitability.

Investors should consider other AI stocks that have shown stronger growth and profitability, such as Palantir Technologies or Databricks. Before investing in C3.ai, it is crucial to evaluate the company's business model, competitive position, and long-term prospects.

References:
[1] https://finance.yahoo.com/news/down-85-buy-dip-c3-083700333.html
[2] https://www.nasdaq.com/articles/down-85-should-you-buy-dip-c3ai-stock