What happened
During a banner month for AI stocks, C3.ai (AI -2.21%) was among the big winners, jumping a whopping 125%, according to data from S&P Global Market Intelligence.
C3.ai stock, which has been volatile all year, jumped on a better-than-expected preliminary earnings report; it concluded its short-seller investigation without finding any wrongdoing and got another tailwind when Nvidia gave much better guidance than expected for the second quarter, showing investors that demand for AI chips is soaring.
Most of the stock's gains in the second half of the month after the earnings report, and it then soared following the Nvidia news.
So what
In the preliminary earnings report on May 15, C3.ai said that revenue in the fourth quarter came in at a range of $72.1 million to $72.4 million, which was flat from a year ago, but slightly better than expectations of $70 million to $72 million.
Its adjusted operating loss of $23.7 million to $23.9 million also beat estimates at a loss of $24 million.
However, the more important news may have been that the company said it concluded an investigation into earlier short-seller accusations and found nothing wrong with its accounting.
The stock jumped 23.5% on May 15 and continued to rally from there. The report seemed to spark a short squeeze in the stock as trading activity remained high for the duration of the month.
The stock got a boost following NVIDIA's report as the leading AI chip maker called for much stronger revenue in the second quarter than expected, lifting artificial-intelligence stocks broadly as it injected another dose of hype into the sector.
Now what
C3.ai reported earnings after hours on May 31, and the market didn't like what it saw. While the fourth-quarter results were known, the company's guidance for fiscal 2024 was weaker than expected.
For the current year, the company sees revenue of $295 million to $320 million, which represents 15% growth at the midpoint. It also called for an adjusted operating loss of $50 million to $75 million for the full year, though management did say that it expected to exit fiscal 2024 with an adjusted profit.
Despite the company's claims of soaring demand for its products, C3.ai still has a lot to prove, given its modest growth rate and lofty valuation, but the volatility is likely to continue given the interest in AI.
