(Reuters) -C3.ai shares jumped 24% to a six-month high on Thursday after the AI software firm delivered third-quarter results ahead of Wall Street expectations and narrowed its full-year revenue forecast on strong enterprise demand.
The company's shares have gained 227% since the end of 2022, valuing it at $4.46 billion, as it draws strong interest from retail investors looking to bet on the boom in artificial intelligence (AI).
However, Nvidia, the poster child for AI, has rocketed 445% in market value during the same period.
Strong demand from federal customers helped C3.ai's subscription revenue increase 23% in the reported quarter to $70.4 million and beat estimate of $66.77 million, according to LSEG data. Subscriptions generate about 90% of total revenue.
"The company is having notable success in the federal sector while signing more multi-year subscription agreements that trend similarly to consumption revenue behavior," said D.A. Davidson analyst Gil Luria.
Other AI-related stocks including BigBear.ai Holdings, Guardforce AI, Arm Holdings and Nvidia gained between 2.5% and 10%, with SoundHound AI climbing 9% ahead of its fourth-quarter results due after markets close.
C3.ai's stock was last trading at $37, above the $30 median price target of the 14 brokerages covering C3.ai. Their average rating, according to LSEG data, is "hold".
Shares of the software company were among the top trending tickers on retail trader forum Stocktwits.
Redwood City, California-based C3.ai also narrowed its 2024 revenue forecast to $306-$310 million, from $295-$320 million.
Still, the new forecast was largely above analysts' estimates of $306.1 million.
The company also said Chief Accounting Officer Hitesh Lath will transition to the chief financial officer role, effective March 1, replacing Juho Parkkinen.
Parkkinen will remain as vice president of finance, C3.ai said.
(Reporting by Medha Singh and Ankika Biswas in Bengaluru; Editing by Savio D'Souza and Sriraj Kalluvila)
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