What happened

Shareholders of Innoviz (INVZ 1.48%) have had a good week. The stock rose 13% through early Friday trading compared to a 2% boost in the S&P 500. This rally only removed a portion of recent losses, though. The stock is down 28% in 2023, according to data provided by S&P Global Market Intelligence, compared to the wider market's 10% increase.

This week's rally was sparked by the auto tech specialist's latest quarterly report, covering the selling period that ran through late March.

So what

Innoviz saw much weaker sales for its computer-vision tech products. Its Wednesday earnings announcement showed a 43% sales decline, which management attributed mostly to a shift in the way that one large customer has been purchasing its products. Operating expenses grew at the same time, leading to an increase in net losses to $35 million from $30 million.

Yet investors were more interested in the company's progress at landing new contracts that might reaccelerate sales and earnings growth in the near future. One large manufacturer is planning to add Innoviz tech to two additional vehicles, management said, and a few other big new contracts are in various stages of negotiation.

Now what

Innoviz is still targeting a tiny sales footprint of between $12 million and $15 million in 2023. The stock remains highly risky given that small revenue level and the company's track record of net losses in each of the last two full fiscal years.

These factors will keep most investors away from this volatile stock, even though this week's news implies positive things about the company's ability to win new customers while expanding its relationship with existing clients in the self-driving space. The big question is whether this success will lead to sustainable profitability in the next few years.