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C3.ai stock plunged more than 20% on Thursday after the company failed to live up to the AI hype with an underwhelming earnings outlook.While C3.ai beat earnings estimates, the software company said it wasn’t “inclined to change expectations” amid the AI frenzy.The company said it expects adjusted losses of up to $75 million in its upcoming 2024 fiscal year.
Shares of C3.ai fell more than 20% on Thursday as the company fell short of huge investors expectations around artificial intelligence stocks.
The software company’s stock plunged as much as 21% shortly after the opening bell after it reported fiscal fourth-quarter earnings results and offered underwhelming guidance to investors. The bar was high for C3.ai considering that its stock price has soared 258% year-to-date heading into its earnings results.
While the company beat its quarterly revenue and profit estimate by $1.1 million and 4 cents per share, it offered investors underwhelming guidance and didn’t follow Nvidia’s footsteps by significantly increasing its revenue guidance.
C3.ai said it expects total revenue of up to $72.5 million in its upcoming quarter, compared to analyst estimates of $71.3 million. For its full fiscal 2024 year, C3.ai said it expects up to $320 million in revenue and adjusted losses from operations of up to $75 million. Analyst are expecting $315.4 million in revenue from the company, not far off from C3.ai’s projection.
C3.ai CEO Tom Siebel said he doesn’t expect to change guidance expectations despite the growing hype around artificial intelligence.
“We are not inclined to pound on the table regarding guidance. In general, we feel comfortable with the expectations that sell side analysts have set for the coming year and we are not inclined to change those expectations at this time,” Siebel said on his company’s earnings call.
Despite the underwhelming outlook, some Wall Street analysts are still upbeat on C3.ai due to the fast-moving developments in the AI space.
Wedbush analyst Dan Ives upgraded C3.ai to “Outperform” from “Neutral” and more than doubled his price target from $24 to $50.
“While it will be a bumpy road, we believe C3 has turned a corner and is ready to now capitalize on the $800 billion AI transformational opportunity over the next decade… Overall we would characterize this as an impressive quarter and overall performance by C3 with conservative guidance the prudent move as C3 navigates this consumption model transition the next few quarters,” Ives said.
But other Wall Street analysts weren’t as bullish on C3.ai after their results, with DA Davidson downgrading the stock to “Neutral” from “Buy.”