What happened

Shares of C3.ai (AI -1.63%) were pulling back today after yesterday's big surge. There was no news out on the volatile AI stock, but its fiscal fourth-quarter earnings report is due out after hours today, and investors seem to be positioning themselves ahead of the report, with some investors taking profits after yesterday's pop.

As of 12:31 p.m. ET, the stock was down 12.1% on high volume.

So what

C3.ai shares have soared since May 15, when the company posted preliminary earnings that were better than expectations and said it concluded its investigation into short-seller claims and found no wrongdoing.

An earlier attack by short-seller Kerrisdale Capital had sent the stock spiraling, but C3.ai seemed to put the charges behind it after that announcement.

Additionally, Nvidia's (NVDA 1.64%) blowout guidance in its earnings report last week stoked another round of enthusiasm for AI stocks, with C3.ai rallying once again.

The stock jumped 33% yesterday on no major news, seemingly in anticipation of today's earnings report or a possible short squeeze, but the market seemed to think that the rally had gone too far today, and the stock pulled back.

Now what

C3.ai already spilled the numbers from the fourth quarter. Revenue was $72.1 million to $72.4 million, flat with the quarter a year ago, but slightly better than guidance, and non-GAAP (generally accepted accounting principles) operating loss was $23.7 million to $23.9 million, also slightly better than guidance.

In the full earnings report, investors will get guidance for the current quarter and possibly the fiscal year, as well as commentary from C3.ai's management about the company's recent performance and new products like its generative AI suite.

After the recent rally, C3.ai stock has gotten expensive, trading at a price-to-sales ratio of 16, and with flat revenue growth and wide losses, the fundamentals are clearly problematic for the valuation.

The stock is still being driven by hype, but the company has a chance to inflect that narrative in today's report. Expect the stock to swing again tomorrow.