What happened
C3.ai (AI 0.96%) stock is losing ground in Thursday's trading as the market digests the impact of Nvidia's (NVDA -0.25%) recent second-quarter results. C3.ai's share price was down 11.1% as of 2:30 p.m. ET, according to data from S&P Global Market Intelligence.
For comparison, Nvidia's stock was up just 3.2% despite Q2 results that blew off the doors of Wall Street's expectations. Meanwhile, the S&P 500 index was down roughly 0.9%, and the Nasdaq Composite index was down roughly 1.2%.
So what
While there doesn't appear to be any business-specific news pushing C3.ai stock lower today, it's not surprising to see the company's share price losing ground. Investors were waiting to see how the market would respond to Nvidia's Q2 report in order to gauge how strong bullish momentum in the broader market might be going forward.
Nvidia posted earnings per share (EPS) of $2.70 on sales of $13.51 billion in Q2, crushing the average analyst estimate's target for EPS of $2.09 on revenue of $11.22 billion. The semiconductor company also issued guidance for sales of roughly $16 billion in the current quarterly period, far exceeding the average analyst target's call for sales of $12.61 billion.
Virtually no one expected Nvidia's Q2 results and guidance to come in as strong as they did, but the blockbuster-earnings report hasn't moved the needle much on its share price -- and the broader market is seeing some bearish momentum. Many companies with a heavy focus on artificial intelligence (AI) are seeing especially large sell-offs, and C3.ai is getting caught up in the trend.
Now what
Investors are likely looking at the response to Nvidia's stellar Q2 earnings report and worrying that the bullish run for AI stocks is running out of steam. The processing leader's recent results and forward guidance set a bar for outperformance that very few companies will be able to match, and it still saw relatively muted gains following the report.
AI PS Ratio (Forward) data by YCharts.
Even after today's pullback, C3.ai stock is up roughly 159% year to date, with much of those gains propelled by excitement surrounding the company's opportunities in artificial intelligence services and applications. With the company still valued at roughly 11 times this year's expected sales and having a largely speculative business outlook, the stock faces significant downside risk if investor enthusiasm surrounding AI pulls back.
