What happened

Investors just can't get enough of AI stocks, and few companies have made that more evident than C3.ai (AI 3.02%), the AI platform for the enterprise that is now up a whopping 314% year to date.

C3.ai, which just happens to have AI as its ticker and in its name, has become something of an indicator for broader market sentiment around artificial intelligence as much as the stock trading on its own merits.

This week, good news from Oracle gave AI stocks a boost, as the enterprise tech giant said strong cloud sales were being boosted by generative AI.

That helped propel the broad market to a banner week, and C3.ai shares were up 24.4% for the week as of 3:29 p.m. ET, according to data from S&P Global Market Intelligence. 

So what

Oracle's earnings report after hours Monday set off a stampede toward AI stocks, as the company said that strong demand for generative AI infrastructure led growth in cloud sales to accelerate from 45% in the previous quarter to 54%.

The news comes at a time when most major cloud infrastructure businesses are seeing growth slow, so investors seem to believe that AI was a difference maker for Oracle.

C3.ai rose on the news, even though it isn't directly exposed to that demand. While the company did recently release a generative AI product it calls enterprise search, allowing the company to search for information through all of its applications and databases, most of its revenue comes from prebuilt AI applications for tasks like demand forecasting.

Investors should also remember that C3.ai currently isn't seeing any meaningful lift from AI demand, as its revenue was flat in its most recent quarter, and the company continues to report wide losses.

Now what

Despite the company's financial struggles, CEO Thomas Siebel struck an upbeat tone in the recent report, saying the company has seen a surge in customer interest in its products. C3.ai also expects revenue growth to improve to around 15% in fiscal 2024, and Siebel said the company would exit the current fiscal year with an adjusted profit. 

While that shows that C3.ai is at least moving in the right direction, the stock has become pricey after this year's big gains. Currently, it trades at a price-to-sales ratio of 18, a level generally reserved for high-growth software stocks, rather than those expecting just 15% growth.

C3.ai could eventually catch the wave in artificial intelligence, but at this point, the stock looks best avoided.