What happened

Shares of artificial intelligence company C3.ai (AI -3.78%) jumped as much as 31.5% in trading on Friday after the company reported fiscal third-quarter 2023 financial results. Shares are near their highs at 2:00 p.m. ET, trading 30.8% higher on the day.

So what

Total revenue for the quarter fell from $69.8 million a year ago to $66.7 million, and net loss ballooned from $39.4 million to $63.2 million, or $0.57 per share. After pulling out $55.8 million in stock-based compensation (which is a real expense but not a cash expense), the loss was $0.06 per share. That beat the $0.22 loss that analysts were expecting.

Management expects revenue to be $70 million to $72 million in the fiscal fourth quarter, with a non-GAAP loss from operations of $24 million to $28 million.

Now what

This is a case of a company beating expectations by a wide margin but not necessarily posting great results. C3.ai is still reporting massive losses, and that doesn't look like it'll end soon. And growth guidance isn't all that strong given the rapid growth in AI usage right now.

The market might love what it saw from C3.ai today, but I'm more wary. The company needs to prove it can make money in AI before I'll be jumping in. It has a lot of potential, but exercise a healthy level of skepticism right now.