With the unstoppable rise of ChatGPT reaching fever pitch following Microsoft’s announcement to integrate its AI-powered tech into its offerings, AI stocks have been having their moment in the sun.
Exhibiting meme-like behavior, it probably helps C3.ai (NASDAQ:AI) that it has for its ticker the on-trend combination of A followed by I. Riding the AI craze, the shares have almost doubled since the turn of the year.
That said, in contrast to the majority of meme stocks, C3.ai’s fundamentals are sound. The company has been working on a platform that helps enterprises operationalize AI.
More recently, and a well-timed event at that, the company revealed a new artificial intelligence-focused product, called the C3 Generative AI Product Suite. The suite utilizes natural language to “rapidly locate, retrieve, and present all relevant data across the entire corpus of an enterprise’s information systems.” Other AI systems are integrated into the suite too, such as Open AI’s ChatGPT, and Google’s and academics’ offerings.
With the company addressing a huge TAM (total addressable market), and its product set “uniquely positioned to solve complex analytics problems for the world’s largest companies,” Canaccord analyst Kingsley Crane can appreciate why the news has caused excitement amongst investors. However, Crane’s take on the new product suite is more nuanced.
“Moving forward,” says the analyst, “it’s clear that leveraging generative AI techniques will be a key priority for C3, but we want to emphasize that there is still a vast market opportunity helping enterprise customers operationalize AI, whether or not that includes some newer generative techniques. To that end, C3’s announcements around generative AI are mainly about highlighting the applicability and extensibility of its existing platform at a time when generative AI has rapidly become popular with consumers.”
More to the point, from an R&D perspective, Crane does not view the announcement as “opportunistic.”
To this end, Crane rates AI shares a Hold (i.e., Neutral), while his $14 price target suggests the shares are currently overvalued by 34%. (To watch Crane’s track record, click here)
Overall, despite the AI hype, Wall Street is generally cautious here. The stock has a Hold rating from the analyst consensus, based on 2 Buys, 3 Holds, and 3 Sells. The stock is priced at $21.14 and the $16.14 average price target suggests ~24% downside from current levels. (See AI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
