Is enterprise artificial intelligence company C3.ai (NYSE:AI) the real deal, or just a speculative hype story? The answer, as usual, can be found in the financial data. Don’t dismiss AI stock as a bursting bubble, as C3.ai’s forecast-beating revenue growth is indisputable.
Investors might find it frustrating that the C3.ai share price still hasn’t recovered to $100. That’s a long way away, but $50 is possible in 2024. If you’re still skeptical, stick around and we’ll figure out why analysts are raising their C3.ai stock price targets.
C3.ai CEO: AI’s Impact ‘Is Not Ephemeral’
Thomas Siebel, C3.ai’s chief executive, doesn’t mince words. He said in a recent interview that the affect of AI “is not ephemeral” and added, “This is very significant. It’s a very important and it’s going to be huge.”
Nvidia’s (NASDAQ:NVDA) blockbuster fourth-quarter 2023 results tend to confirm Siebel’s optimism about the future of AI. But then, C3.ai also delivered outstanding quarterly results indicating strong AI-market demand.
Indeed, Siebel has every right to declare that fiscal 2024’s third quarter was a “great quarter” for C3.ai.
The company grew its revenue 18% year over year to $78.4 million, beating the analysts’ consensus estimate of $76.14 million. This result also came in above C3.ai’s previously published guidance of $74 million to $78 million in expected quarterly revenue.
What about the bottom-line results? In Q3 of fiscal 2024, C3.ai reported a non-GAAP net earnings loss of 13 cents per share. That’s a lot better than the loss of 28 cents per share analysts had expected.
So, if you’re a stickler for profitability, I encourage you to keep an open mind. C3.ai isn’t currently profitable, but a net loss of 13 cents per share isn’t terrible if AI stock is $30 or more.
Analysts Expect AI Stock to Rally
Considering C3.ai’s excellent quarterly results, Wall Street’s experts took notice and some of them envision significantly higher C3.ai share prices.
For example, Wedbush analyst Dan Ives raised his AI stock price target from $35 to $40. Furthermore, Ives views Q3 FY2024 as a “step in the right direction for C3.”
Meanwhile, Canaccord analysts lifted their C3.ai stock price target from $27 to $31, and Morgan Stanley analysts increased their price target on C3.ai shares from $20 to $21.
However, the Morgan Stanley analysts will probably have to revise their price target, since C3.ai shares rallied to $33 post-earnings.
I tend to concur with Ives’ optimistic price target. C3.ai expected to generate revenue of $306 million to $310 million for fiscal 2024, and that range is above Wall Street’s consensus estimate of $305.6 million.
If C3.ai hits its target revenue range, AI stock deserves to move higher in the coming months.
AI Stock: $50+ Is Only a Matter of Time
Ives envisions the C3.ai stock price reaching $40, but that forecast might be too conservative. After all, C3.ai just posted forecast-beating results and optimistic full year revenue guidance.
Maybe it will just take a little more time for analysts to appreciate C3.ai’s growth potential. In the meantime, investors should target $50 or more for AI stock and can start building their share position now.
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.
