C3.ai (AI 3.02%) is an expert in artificial intelligence (AI) tools and services. But the company is not trying to replace OpenAI's ChatGPT at all.
Instead, the company provides a range of tailor-made and turnkey AI solutions to support lots and lots of different business operations. And C3.ai's tools can unlock game-changing benefits in some cases.
Read on to see where C3.ai's products and services can disrupt age-old traditions and standard operating procedures.
What C3.ai is all about
When Thomas Siebel (of Siebel Systems fame) founded C3 in 2009, he named it after the company's primary market. The "C" stands for Carbon and the "3" refers to the three core uses for its AI tools: measure, mitigate, and monetize. In other words, C3's first area of focus was the energy sector, where many companies needed help with calculating, reporting, and complying with carbon taxes.
The story started with utility companies, but oil and gas producers form C3's main target market today. Thirty-four percent of last year's revenue came from that sector, alongside 11% from the old mainstay of energy and utilities.
The company has built a suite of powerful data visualization tools that can present analysis results in an actionable way. C3 then developed a range of more than 40 applications that connect these visualizations to AI-driven data analytics. As a result, C3's clients have access to a wide range of "turnkey applications" that can help oil and gas companies analyze energy reserves, show banks how risky a particular loan application is, combine separate healthcare symptoms into the basis for a diagnosis, and so on.
In the case of oil and gas, these tools can find hidden reserves, cut costs through more efficient maintenance scheduling, optimize transportation policies, and more. C3's apps provide similar efficiency and analysis benefits in other industries, based on different sets of expectations, training data, and algorithms.
Diversification and two different AI app models
The company is actively diversifying its revenue streams, seeking new business in different industries. The leading source of new C3 contracts in the most recent quarter was the federal, defense, and aerospace market with a 37% slice of the incoming orders pie. Manufacturing followed at 16%, with high tech and oil and gas tied for third place with 11% shares of the total order flow.
The turnkey apps are very popular right now, accounting for 83% of last quarter's order bookings. The remaining 17% came from the C3 AI Platform, a more hands-on development platform that lets each client tweak their AI-powered data analytics to their exact specifications.
That heavy emphasis on less intensely powerful but far easier-to-use solutions makes sense at this particular time, as many companies are kicking the tires of this AI idea for the first time. I expect the product mix to shift toward the app development platform over time, as business leaders and developers figure out what they actually want the AI systems to do for them.
C3.ai goes beyond all-purpose chatbots
Don't get me wrong -- some of C3's tools will actually remind you of popular consumer products like ChatGPT. For example, the company also provides a generative AI development suite, which can be used to plug chatbot-driven workflows into the C3 AI Platform's data analysis tools. But the company didn't add ChatGPT processing to its existing toolkit. Instead, this natural language system is an in-house AI engine, pre-trained to handle specific industries and data sets.
So C3's focus on business-oriented AI tools continues as before, but boosted by a sudden surge in public interest. C3.ai is an experienced veteran that fills a specific niche in the AI market. This stock offers a unique investment proposition in the AI market with its industry-specific solutions and growing client base. Just keep in mind that C3 isn't an all-purpose chatbot system and keep an eye on its diversified market approach.
