C3.ai's Stock Skyrockets As Its AI Gets Dangerously Powerful With New Microsoft Deal…

C3.ai—a company so committed to putting “AI” in its name that it did it twice. And honestly? It might be justified. This small-cap artificial intelligence player with the GOAT of a ticker symbol ($AI, for anyone wondering), seems to be racking up wins left, right, and twice on Sunday. But now with the blistering earnings report it dropped yesterday, the company has officially clinched its seventh consecutive quarter of accelerating revenue growth, a narrower loss than expected, and a brand new partnership with Microsoft that everyone saw coming a mile away. 

(Source: Giphy) 

In short, C3.ai had a field day yesterday with some solid stats that had Wall Street stepping over each other to update their “opinions” nobody asked for. The stats? Well let’s start with earnings per share that came in at a loss of 6 cents. Sure, it’s a loss, but here’s the girthy part—Wall Street was bracing for a 16-cent faceplant. So, basically, they’re losing… less.

(Source: Market Watch) 

On the other hand, revenue topped $94.34 million for the quarter, beating estimates of $91.02 million. That’s up from $73.23 million in the same quarter last year. Translation: That’s a sexy 29% bump baby. Additionally, subscription revenue nailed $81.2 million, or 86% of total revenue, up 22% year-over-year—all while cash in the bank is now nestled at $730.4 million. So yeah, all good things so far.

But, but, but… what about the guidance? Glad you asked. C3.ai’s fiscal 2025 revenue guidance also topped analyst estimates, landing between $378 million to $398 million (consensus was $382.57 million). Meaning, C3.ai flew by Wall Street’s expectations with flying colors—and weirdly enough, the momentum all has to do with a move they made back in 2022. 

(Source: Giphy) 

See, C3.ai switched from a subscription-based pricing model to a consumption-based one just two years ago, and while some looked at it as a risky move that could’ve gone either way—it worded out bigly.  Consumption pricing is like a utility bill: the more you use, the more you pay. And with AI demand hotter than Britney Spears’ 2001 VMAs performance, this model is starting to look genius.

CEO Thomas Siebel claims it lowers barriers to entry for companies hesitant to commit to long-term contracts, and now that it’s synced up with industry standards (looking at you, AWS and Azure), it’s driving growth. C3.ai isn’t just riding the AI hype train—it’s now driving it, thanks to a new strategic alliance with Microsoft. Think Beyoncé and Jay-Z, but for enterprise AI. For more context, C3.ai is now a preferred AI application provider on Microsoft Azure, effectively giving it a Microsoft-powered megaphone to shout its name from the rooftops. The Azure salesforce will hawk C3.ai’s solutions worldwide, earning commissions on sales. Oh, and Microsoft is also subsidizing C3.ai pilot projects through 2030. That’s seven years of corporate hand-holding.

(Source: Reuters) 

Naturally, not only did CEO Thomas Siebel call this move an “inflection point for Enterprise AI”, but this had investors frothing at the mouth as C3.ai’s stock popped 12.6% in after-hours trading after the earnings release, hitting $46.77. Meaning, this rally put the stock’s YTD gains at 45% at the time of this writing (which is well ahead of the Nasdaq Composite’s 32% gain).

However, with all of that said, let’s not pretend this has been all smooth sailing. C3.ai has been as volatile as a LimeWire download. After multiple failed rallies earlier this year, the stock finally cleared key technical levels (50-day and 200-day moving averages) in October, and it’s been on a tear ever since. If you’re into technical analysis, here’s another juicy one: its Relative Strength Rating jumped from 49 to 93 in just four weeks. Our homeboys over at Investor’s Business Daily say anything above 80 is worth a look. TL;DR: This stock might finally be getting its act together.

(Source: IBD) 

In the end, it’s clear AI isn’t just having a moment, it’s having the moment.  Between ChatGPT taking over your inbox and every tech company under the sun slapping “AI” onto their products like it’s the dot.com boom, the hype is impossible to ignore. C3.ai is positioned to ride this trend, especially with its new Microsoft alliance and a focus on enterprise solutions that actually matter. Sure, it’s not profitable yet (cue the haters), but seven consecutive quarters of revenue growth and a scalable pricing model suggest this isn’t just another Pets.com situation. 

(Source: Giphy) 

Now, with that, I’m not here to tell you how to spend your hard-earned cash in 2024, but C3.ai is worth keeping on your radar. The Microsoft partnership is a game-changer, the numbers are moving in the right direction, and the stock is still mooning. But just remember, AI stocks are the wild west right now. You could see big gains—or watch it rip faces off. Either way, C3.ai is proving it’s not just a flash in the pan.

In the meantime though, filter this through a brain-cell and place your bets accordingly, friends. And as always, stay safe and stay frosty! Until next time…

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Stocks.News holds positions in Microsoft and Amazon as mentioned in the article.