C3.ai stock price forecast: brace for a 30% AI dip

August 24, 2023 05:00 PM PDT | By Invezz

C3.ai stock price forecast: brace for a 30% AI dip — Image source: Invezz

AI hype is fading

One of the biggest themes of this week was on artificial intelligence as Nvidia published strong results. The company’s revenue and profitability surged as orders for its AI chips soared during the quarter.

Now, there are concerns about the industry despite the strong Nvidia’s results, which explains why stocks like AMD, Microsoft, AITX, and C3.ai dropped.

C3.ai shares have been in a strong downward after peaking in June this year. This decline is mostly because of concerns about the company’s valuation and growth prospects in the new age of AI.

In terms of valuation, C3.ai has a market cap of more than $3.7 billion. Looking at its income statement, we see that the company’s annual revenue jumped from $183.2 million in 2021 to $252 million in 2022. It has made $266 million in the past four quarters,

These numbers mean that the company is overvalued in revenue perspective since it has a P/S multiple of 13.90x. Most fairly valued firms have a PS multiple of less than 5x. Keep in mind that C3.ai has constantly generated annual losses. Its loss in the past 4 quarters was over $269 million.

The biggest concern is whether the hype in AI will translate to strong revenue and profitability in the future. The most recent results show that C3.ai’s growth is a bit mild. It made $72.41 million in Q4’23, a 0.13% YoY growth.

Therefore, as I warned in this article, there is a likelihood that the AI momentum will fade soon. At the time, I compared AI with other recent hypes in the market like electric vehicles, metaverse, and green energy.

C3.ai stock price forecast

The daily chart shows that the AI stock price has been in a strong bearish trend in the past few months. It recently made a bearish breakout below the important support level at $34.51, the highest point on April 3rd.

The shares have moved below the three lines of the Williams Alligator and the 50% Fibonacci Retracement level. Therefore, I suspect that the shares will continue falling in the coming weeks as sellers target the key support at $20, which is the 78.6% retracement point. This target price is about 30% below the current level.

The post C3.ai stock price forecast: brace for a 30% AI dip appeared first on Invezz.

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