C3.ai Stock Forecast: AI, OKTA shares surge as Snowflake flails in volatile session for software
- C3.ai stock closed up nearly 25% on Thursday.
- The artificial intelligence platform grew subscription revenue and raised its outlook.
- Okta also surged more than 22% on an impressive quarter.
- Snowflake did not fare as well, diving more than 18%.
C3.ai (AI) stock advanced 24.5% on Thursday, closing just below $37, after the data platform company posted fiscal third-quarter results that topped Wall Street estimates. Subscription revenue rose enough to get approval from analysts, and AI stock jetted up to levels not seen since August 2023. Shares fell 1% afterhours.
Okta (OKTA), the maker of customer identification software, also watched its share price spike on a good earnings release. Adjusted earnings arrived about 25% better than expectations, and revenue of $605 million beat consensus by more than $17 million.
Snowflake (SNOW), however, was the odd man out in a day that saw severe volatility from software firms, dropping some 17% lower. The much-heralded company suffered from changes in management, as well as fiscal 2025 revenue guidance arriving at a 22% growth rate, well below fiscal 2024's 38% growth rate.
The NASDAQ led the way on Thursday, closing up 0.9%. The S&P 500 was a bit more steady with a gain of 0.52%, while the Dow Jones added just 0.12%.
C3.ai stock news
C3.ai is still offering generous trial runs for many firms curious about its runtime platform for building and launching artificial intelligence-related applications, as well as software geared toward customer management. Still, the firm reported fiscal Q3 subscription revenue of $70.4 million compared with $57 million one year ago.
Overall, C3.ai had sales of $78.4 million — a $2.3 million beat above consensus and up 18% from the year prior. Adjusted earnings per share was $-0.13, which beat the consensus estimate by some 15 cents.
Wall Street was impressed by customer engagement figures that rose 80% from a year ago to 445. It would seem that C3.ai is starting to gain real traction in the industry.
"Government was a key area of strength with federal revenue up 100%+," wrote analysts from Morgan Stanley.
Wedbush Securities pushed its price target on AI stock up from $35 to $40 per share.
Management raised full-year fiscal 2024 guidance up from consensus at $305.5 million to a range of $306 million to $310 million, placing the fiscal Q4 revenue midpoint at $84 million.
AI stocks FAQs
What is artificial intelligence?
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
What are AI applications?
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
What are some stocks that fit into the AI field?
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Could artificial intelligence generate another stock bubble?
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
C3.ai stock forecast
There are two significant factors in Thursday’s share price surge for C3.ai stock. The first is that AI stock gapped up above the $32 level. That price level has held sway since working as support in June 2023 before switching to resistance in the second half of last year. A break and close above that level is key for bulls to determine that a further uptrend is in the works.
Secondly, Thursday’s daily candle has continued to rise enough to close well above its opening price. This signifies that a volatile gap up is not reliant on the emotion of traders, and that the new price action level probably has staying power.
Traders will notice that AI stock is now entering overbought territory on the Relative Strength Index (RSI), but that doesn’t mean that a pullback is in the cards. Instead, AI stock will likely keep advancing until it reaches more common historical volume levels in the low $40s. Longer-term resistance and a sizable price target is the June 2023 resistance at $48.50.
C3.ai daily stock chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
