This AI stock is down 93%, although it has partnerships with Amazon, Microsoft and Alphabet. Buy it? | Tech Rasta

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What do you do? Amazon, Microsoftand Google Parent alphabet Is it in everyone? All of them have market values ​​of more than $1 trillion.

But there is another thing. All of them partnered with a small artificial intelligence (AI) company C3.ai (AI -1.45%).

C3.ai is a leader in enterprise AI, an industry it helped create. The company develops ready-made and customizable AI solutions for hundreds of companies across various industries, materially accelerating their adoption of advanced technology. The stock is currently trading at a very attractive price after a 93% decline from its all-time high. Why investors should consider buying.

Side profile of a man's head with blue and purple weathered images.

Image source: Getty Images.

C3.ai has world-class partners and customers

Cloud-computing technology is critical to businesses operating in any capacity online, and the three leading providers of cloud services are Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. These platforms provide their customers with hundreds of tools that accelerate business operations, and the ability to build artificial intelligence models is one of them.

AI can complete mundane tasks in the same amount of time that humans can, especially when they have large amounts of data, so businesses are scrambling to integrate the technology. This is where C3.ai comes in. Integrating its platform with AWS, for example, allows an AWS customer to build an AI application 26 times faster than building it on AWS alone. C3.ai can reduce the need to write code by almost 99%, saving a lot of time.

Recognizing the value it creates, cloud providers are partnering with C3.ai to accelerate the adoption of AI in their customers’ businesses. Both Microsoft Azure and Google Cloud are using C3.ai technology to improve their cloud services. The partnership with Azure in particular has generated at least $200 million in joint deals to date, including the acquisition of 16 new customers in the first quarter of fiscal 2023 (ended July 31).

In total, C3.ai now has 228 users across multiple industries, from technology to manufacturing to oil and gas. The fossil fuel industry may not be one of the investors associated with advanced technology like AI, but an oil giant Shell C3.ai is using C3.ai to monitor 13,000 devices to improve safety, reduce emissions and predict failures that could lead to significant environmental disasters.

C3.ai is steadily growing with plenty of potential

In fiscal 2022 (ended April 30), C3.ai generated $252.8 million in revenue, up 38% year over year. The company expects a very small increase of 1% to 7% in fiscal 2023 due to an unfavorable economic environment, which will force businesses to cut costs.

But in the first quarter of the fiscal year, C3.ai increased its remaining performance obligations (RPOs) by 58% to $458.2 million. Since RPOs are generally expected to be converted into revenue in the future, this is a sign that any slowdown in sales may be temporary. Additionally, the company expects its addressable market opportunity to reach $596 billion by 2025, so it has a long runway ahead.

C3.ai is still not profitable, having lost $71.9 million in the quarter. This is the key reason why its stock has lost ground this year as investors have shied away from loss-making companies. But it has a strong balance sheet with more than $900 million in cash, equity and short-term investments, meaning it has plenty of cash to invest in growth and innovation.

C3.ai stock is currently cheap

After falling 93% from its all-time high, C3.ai’s market cap currently stands at just $1.37 billion. Keep in mind that the company has a cash balance of over $900 million, as investors are only valuing the actual business in the neighborhood of $500 million.

Considering only the company’s outstanding RPOs and not considering its great future potential or its partnerships with industry giants, that’s a rock-bottom valuation. Additionally, according to a report by McKinsey & Company, artificial intelligence could add $13 trillion to the global economy by 2030, as 70% of organizations will implement the technology in one way or another.

C3.ai is a first mover in the enterprise-AI space, so it deserves a lot of credit, and the steep decline in its stock price is an excellent long-term buying opportunity.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, is a member of the board of directors of Amazon subsidiary, The Motley Fool. Anthony De Pizio has no position in any of the stocks mentioned. The Motley Fool owns and recommends positions in Alphabet (A shares), Alphabet (C shares), Amazon and Microsoft. The Motley Fool recommends C3.ai, Inc. The Motley Fool has a disclosure policy.

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