Dj C3.Ai Inc. Stock Outperforms Competitors Despite Losses On The Day

AST SpaceMobile, Inc. (ASTS) came out with quarterly earnings of $0.10 per share, beating the Zacks Consensus Estimate of a loss of $0.18 per share. This compares to loss of $0.23 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 155.56%. A quarter ago, it was expected that this company would post a loss of $0.19 per share when it actually produced a loss of $0.14, delivering a surprise of 26.32%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

AST SpaceMobile, which belongs to the Zacks Wireless Equipment industry, posted revenues of $1.1 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 50%. This compares to zero revenues a year ago.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

AST SpaceMobile shares have added about 362.5% since the beginning of the year versus the S&P 500's gain of 25.5%.

What's Next for AST SpaceMobile?

While AST SpaceMobile has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for AST SpaceMobile: favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.17 on $4.2 million in revenues for the coming quarter and -$0.97 on $7.8 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Wireless Equipment is currently in the bottom 45% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the broader Zacks Computer and Technology sector, C3.ai, Inc. (AI), has yet to report results for the quarter ended October 2024. The results are expected to be released on December 9.

This company is expected to post quarterly loss of $0.16 per share in its upcoming report, which represents a year-over-year change of -23.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

C3.ai, Inc.'s revenues are expected to be $91.01 million, up 24.3% from the year-ago quarter.

Zacks Investment Research

C3.ai AI shares have lost 11.6% in the past year against the Zacks Computers - IT Services industry’s rise of 26.3% and the broader Zacks Computer & Technology sector’s return of 36.7%.

The underperformance can be attributed to stiff competition in the enterprise AI sector and C3.ai’s higher investment plan to gain market share. This is expected to keep margins under pressure in the near term.

Despite these headwinds, C3.ai’s expanding client base and the growing adoption of its Enterprise AI software offer positive signs for investors.

This positive momentum is reflected in the company’s first-quarter fiscal 2025 results, where it experienced strong revenue growth, with a 21% increase in total revenues year over year, reaching $87.2 million.

YTD Performance

AI’s Strong Partner Base Boosts Prospects

C3.ai has been one of the prominent AI stocks in recent times thanks to strong demand for C3 Generative AI solutions and an expanding partner base that includes the three big cloud providers Amazon AMZN, Alphabet GOOGL and Microsoft MSFT.

In July, C3 AI achieved the AWS Generative AI Competency, highlighting its expertise in generative AI solutions to enhance customer experience, streamline workflows, and deliver actionable results across various industries. This achievement has further solidified its partnership with Amazon.

In the first quarter of fiscal 2025, C3.ai and Alphabet’s cloud business, Google Cloud, closed 40 agreements, marking a 300% year-over-year increase. This is driven by the C3 AI State & Local Government Suite, including applications like C3 AI Property Appraisal and C3 Generative AI for Government Benefits, with 24 agreements signed with state and local governments.

C3.ai is also benefiting from its expanding partnership with Microsoft. It leverages Microsoft’s Azure platform to enhance its AI offerings and reach a broader customer base across sectors.

Expanding relationships with these cloud providers bode well for C3.ai’s prospects. In the first quarter of fiscal 2025, the company closed 51 agreements, accounting for 72% of total agreements through its partner network, marking a 155% year-over-year increase. Bookings supported by partners also increased 94% year over year.

C3.ai’s Prospects Ride on Strong Portfolio

Expanding AI portfolio has also been a major growth driver for its success. In October, AI announced the rebranding of its Asset Performance Suite, a collection of AI applications aimed at maximizing asset value and improving sustainability performance for enterprises.

In the first quarter of fiscal 2025, the company successfully closed a pilot of the newly launched C3 Generative AI for Government Programs with a state in the Northeastern U.S.

It streamlines access to public benefits and government programs across healthcare, employment, financial assistance, and education, enhancing contact center operations with improved response times and first-call resolution, while delivering fast, accurate, and secure answers in 133 languages without hallucinations.

AI Offers Solid Top-Line Growth Guidance

For fiscal 2025, AI still expects revenues between $370 million and $395 million, which implies year-over-year growth between 19% and 27%.

Non-GAAP loss from operations is still expected to be between $95 million and $125 million for fiscal 2025.

For the second quarter of fiscal 2025, C3.ai expects revenues between $88.6 million and $93.6 million. Non-GAAP loss from operations is expected to be between $26.7 million and $34.7 million.

The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $383.04 million, indicating 28% growth year over year. The consensus mark for loss is pegged at 53 cents per share, which has remained unchanged over the past 30 days.

The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is currently pegged at $91.01 million, indicating growth of 24.28% over the figure reported in the year-ago quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

C3.ai, Inc. Price and Consensus

C3.ai, Inc. price-consensus-chart | C3.ai, Inc. Quote

What Should Investors Do With AI Stock?

We point out that C3.ai stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.

However, C3.ai’s strong demand for C3 Generative AI solutions and an expanding partner base are driving continuous top-line growth and enhancing its growth prospects.

Hence, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term.

The technical indicator is also bullish for AI as the shares trade above the 50-day and 200-day moving averages, indicating robust upward momentum.

AI Trades Above 50-Day & 200-Day SMA

AI stock currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

The latest trading session saw C3.ai, Inc. (AI) ending at $27.79, denoting a -1.42% adjustment from its last day's close. This change lagged the S&P 500's daily loss of 0.29%. Elsewhere, the Dow lost 0.86%, while the tech-heavy Nasdaq lost 0.09%.

Prior to today's trading, shares of the company had gained 2.21% over the past month. This has lagged the Computer and Technology sector's gain of 3.2% and the S&P 500's gain of 3.3% in that time.

The investment community will be paying close attention to the earnings performance of C3.ai, Inc. in its upcoming release. The company is slated to reveal its earnings on December 9, 2024. The company's upcoming EPS is projected at -$0.16, signifying a 23.08% drop compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $91.01 million, reflecting a 24.28% rise from the equivalent quarter last year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of -$0.53 per share and a revenue of $383.04 million, signifying shifts of -12.77% and +27.86%, respectively, from the last year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for C3.ai, Inc. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.12% higher. At present, C3.ai, Inc. boasts a Zacks Rank of #2 (Buy).

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 38, which puts it in the top 16% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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