What happened
C3.ai (AI 6.62%) has had an amazing run this year. Inspired by the wildfire popularity of ChatGPT, and investor dreams of AI-fueled riches, shares of the artificial intelligence stock were up nearly 150% since the start of this year -- until all of a sudden, C3.ai stock turned tail this morning and retreated.
As of 10:55 a.m. ET, C3.ai stock is down 9.5%.
NYSE: AI
Key Data Points
So what
What's got investors rethinking their enthusiasm for C3.ai stock today? Well as it turns out, it may be the company's own fault -- for reminding investors this morning that AI is more than just a concept, and more than just a technology.
When personified in the form of a company with a definite name like "C3.ai," AI is also a business. A business needs revenue, and a business needs profits. (Otherwise, it's not a business investors should want to own.)
This morning, C3.ai reminded investors that in less than one month -- Thursday, March 2, to be precise -- C3.ai will be reporting its fiscal Q3 2023 earnings. And sad to say, what the company reports on that date probably won't sound great to most investors.
Now what
According to analysts polled by Yahoo! Finance, C3.ai is probably going to report a decline in revenue for the quarter, with sales down as much as 8% to $64.2 million. That's probably not what investors betting on AI being a growth industry will be hoping to hear.
And the news gets worse: C3.ai isn't profitable yet. It's almost never profitable, having just barely broken even in one single quarter in its lifetime, back in mid-2020, but it's going to be particularly unprofitable in Q3. In fact, analysts are forecasting a per-share loss of $0.22 for C3.ai next month -- triple its year-ago quarterly loss.
Indeed, if things play out as expected, by the end of this fiscal year C3.ai is going to have to fess up to losing more than $300 million, and burning more than $150 million in cash, on annual revenues of barely $260 million.
At that point, investors will have to make a decision: to keep buying shares of C3.ai "because they're going up" -- or to take a long, hard look at the numbers, and decide whether they really want to keep their money invested in a stock that can't earn any money of its own.
