Artificial Intelligence

Amid Lofty Valuation Of C3.ai Stock, Wall Street Is Mixed On Future


C3.ai (AI) is getting mixed reviews as Wall Street analysts initiate coverage on the artificial intelligence software company and recent initial public offering. While the lofty valuation of C3.ai stock is a key issue for some analysts, others expect upside from partnerships in the enterprise market.




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Wedbush analyst Daniel Ives started coverage with a outperform rating on C3.ai.

“In particular, the secret sauce of the C3 architecture makes it easy to deploy and scale within a given enterprise,” Ives said in a report to clients. He added: “The company has amassed an impressive reference customer list from Shell to AstraZeneca (AZN) to the largest financial institutions.”

Bank of America analyst Brad Sills initiated coverage with a neutral rating on Monday citing valuation. But he’s upbeat on partnerships.

“We believe that the emerging Raytheon partnership is likely to drive meaningful leverage in the defense industry, as Baker Hughes (BKR) has in the oil and gas industry,” Sills said in his note to clients. “C3.ai could partner with leading industry partners in other key industries such as financial services, health care, and manufacturing.”

Also, Morgan Stanley initiated coverage with an underweight rating, noting C3.ai’s high trading multiple versus estimated 2022 revenue. In addition, Canaccord Genuity initiated coverage with a hold rating. Analyst David Hynes said “investors are already pricing in the best-case scenario” for C3.ai stock.

C3.ai Stock Has Yet To Form IPO Base

C3.ai sells AI software for business applications. In addition, C3.ai raised $651 million in its December IPO.

C3.ai stock initially soared but shares have retreated from an all-time high of 183.90 set on Dec. 23.

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Shares in C3.ai rose 1.8% to close at 122.17 on the stock market today. C3.ai stock has yet to form an IPO base, which would provide a proper entry point.

In the energy industry, startup C3.ai has teamed with Baker Hughes and Microsoft (MSFT) to use artificial intelligence in preventive maintenance.

In October, Microsoft and Adobe Systems (ADBE) partnered with C3.ai to sell customer relationship management software. Microsoft invested in C3.ai prior to the IPO.

Enterprise Deployment Of AI Platforms Lagging?

In financial services, C3.ai has partnered with Fidelity National Information Services (FIS).

In addition, Deutsche Bank analyst Patrick Colville initiated coverage on C3.ai stock with a neutral rating.

“Despite the benefits of artificial intelligence, enterprises have struggled to deploy AI in production environments,” he said.

Meanwhile, at KeyBanc Capital Markets, analyst Michael Turits started coverage with a sector perform rating. Turits says C3.ai stock is expensive. But he also is bullish on partnerships.

“C3 has established ‘lighthouse’ go-to-market and development partnerships with leaders in industries like energy, defense, and financial services,” he said in a report.

Thomas Siebel, who started Siebel Systems and sold it to Oracle (ORCL) for nearly $6 billion in 2006, founded C3.ai.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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