Analyst Outlook
The recent surge in demand for AI solutions has proven to be a boon for C3.ai, with Wedbush analyst Daniel Ives expressing confidence in the company’s performance by reiterating an Outperform rating on the stock and raising the price forecast to $40 from $35. This optimism comes on the heels of C3’s impressive third-quarter earnings, surpassing estimates with revenues totaling $78.4 million. Ives views this achievement as a strong indication of C3’s upward trajectory as their AI platform gains traction in improving operations, enhancing processes, and transforming businesses.
Positive Growth Projections
C3’s partner ecosystem has been flourishing, with bookings from partners experiencing exponential growth of 337% year-over-year and 62% quarter-over-quarter. This growth can be attributed to the company’s strategic go-to-market approach, which has facilitated essential pilot adoptions and accelerated enterprise demand for AI products. In light of these developments, Ives raised the FY24 revenue forecast to $308.4 million, reflecting his bullish outlook on C3’s growth potential.
Varied Analyst Perspectives
While Ives is optimistic about C3’s future, other analysts hold differing views. Canaccord Genuity analyst Kingsley Crane maintained a Hold rating on the stock but raised the price target to $31 from $27. Crane acknowledges the market’s growing enthusiasm for AI innovations and the anticipation surrounding C3’s Q3 results.
Meanwhile, Needham analyst Mike Cikos highlighted the significance of C3.ai’s growing importance and specialization within the US Federal sector, citing an impressive 85% increase in bookings. Despite this, Cikos reiterated a Hold rating on the company.
KeyBanc Capital Markets analyst Eric Heath expressed concerns regarding C3’s ability to expand beyond vertical-specific AI applications and differentiate itself in horizontal adjacencies. The shift to a consumption revenue model has also raised some apprehensions about the company’s long-term prospects.
Optimistic Industry Outlook
Oppenheimer analyst Timothy Horan is bullish on C3’s future, reiterating an Outperform rating with a $40 price forecast. Horan emphasizes C3’s position as a pure-play platform for enterprises to leverage AI quickly and efficiently, predicting long-term benefits from the company’s GenAI solutions. Despite recognizing the stock’s high volatility, Horan remains positive about C3’s potential for growth.
JMP analyst Patrick Walravens echoes this sentiment, maintaining a Market Outperform rating on C3.ai and setting a price target of $40. Walravens sees C3 as a prime opportunity for capital appreciation, especially considering the vast Total Addressable Market expected to reach approximately $792 billion by 2026.
Market Response
Despite varying analyst opinions, market response has been positive, with C3.ai shares trading 23.9% higher at $36.79 at the close on Thursday. This surge reflects investors’ confidence in the company’s ability to capitalize on the growing demand for AI solutions.