Amazon, Microsoft, and Alphabet have teamed up with this AI stock. Is it buying? | Motley Fool

Artificial intelligence (AI) is a technology that is advancing rapidly, thanks to companies like C3.ai (Amnesty International -0.07%)It is gradually becoming available to all companies in all industries. The company is carving out a path in an entirely new segment it calls enterprise AI, selling off-the-shelf, customizable AI applications to customers wanting to augment their operations.

It is estimated that by 2030, up to 70% of all organizations will implement AI in one way or another, adding $13 trillion in output to the global economy. It’s a huge opportunity for a company like C3.ai, and they already have a leadership position in the industry.

The world’s largest technology companies have established partnerships with C3.ai, including AmazonAnd the Microsoftthe father of Google the alphabetVerify the quality of what the company is building. It is one of the reasons why investors should consider owning C3.ai shares, especially since they are currently attractively priced after they are down 90% from their all-time high.

C3.ai expands access to AI

C3.ai has just announced its financial results for the first quarter of fiscal year 2023 (ending July 31), during which time its customer base has grown 27% year-over-year to 228 companies. These companies operate within at least 11 different industries, from technology to manufacturing finance, highlighting the diversity of AI applications from C3.ai.

As a prime example, C3.ai technology is very popular among oil and gas giants, who are looking for advanced artificial intelligence to help them run cleaner operations. C3.ai helps them reduce carbon emissions and predict critical equipment failures to prevent catastrophic environmental disasters. global oil giant coincidence It monitors over 13,000 pieces of equipment through C3.ai, with 1.2 million daily data flows.

Technology leaders Amazon, Microsoft, and Alphabet are collaborating with C3.ai to build on their vast cloud services sectors. With the rapid shift to online operations for many businesses, the cloud has become a critical facilitator, and there is a race among service providers to deliver the most impactful solutions. With Google Cloud specifically, one of C3.ai’s roles is to help small businesses adopt AI more quickly and extract maximum value from their AI applications.

This time last year, C3.ai and Microsoft closed more than $200 million in deals together for their Azure cloud platform. Their partnership continues to grow, and they signed 16 new joint sales in the first quarter.

C3.ai stocks are cheap now

After announcing first-quarter financial results, investors sent C3.ai stock down 15% in after-hours trading. They sounded frustrated with the company’s future guidance for the entire fiscal year 2023, which indicated revenue could grow just 7% compared to fiscal 2022. C3.ai says the current challenging economic environment is making customers tougher when committing to large contracts.

However, the company managed to increase its quarterly revenue by 25% year over year to reach $65 million. In addition, it is moving from subscription-based pricing to a consumption-based pricing model and adjusting sales and partnership models in steps designed to accelerate growth. She says this will boost adoption and increase C3.ai’s market share over time.

The company is not profitable yet because it is still investing heavily in expansion, which is the right thing to do given that its revenue and customer base are still growing rapidly in the short term – although this type of strategy is not popular with investors at the moment, As the appetite for risk is low. It lost $71.8 million in the first quarter, which followed a net loss of $192 million for fiscal 2022. But C3.ai has more than $900 million in cash, rewards, and short-term investments on its balance sheet, so it can afford to spend aggressively right now.

C3.ai’s market capitalization is only $1.65 billion at the moment, which means that investors value the business only at $750 million net of cash. That’s a paltry 3 sales in fiscal year 2022. Given the company estimates that its opportunity could be worth $596 billion by 2025, as well as considering the massive partnerships and customer relationships that C3.ai has already built up, this could be a golden opportunity for investors to take a stand. long-term.

John Mackie, CEO of Whole Foods Market, an Amazon company, is a member of The Motley Fool’s Board of Directors. Susan Fry, CEO of Alphabet, is on the board of The Motley Fool. Anthony Di Pizzo has no position in any of the stocks mentioned. The Motley Fool has and recommends positions in Alphabet (A shares), Alphabet (C shares), Amazon and Microsoft. The Motley Fool C3.ai, Inc. recommends Motley Fool has a disclosure policy.


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