Cathie Wood Says Software Is the Next Big AI Opportunity -- 1 Super Stock You'll Want to Buy If She's Right

Core Viewpoint - Cathie Wood believes that software companies represent the next significant opportunity in the AI sector, predicting a potential revenue generation of $8 for every dollar spent on chips from suppliers like Nvidia [1] Group 1: C3.ai's Business Model and Market Position - C3.ai has developed over 130 ready-made AI applications that can be deployed within three months, serving various industries such as oil and gas, manufacturing, utilities, and financial services [4] - The company has established partnerships with major cloud service providers like Amazon Web Services, Microsoft Azure, and Google Cloud, enhancing its customer reach and enabling broader AI solutions [5][6] - C3.ai's shift to consumption-based pricing has accelerated its growth, allowing for quicker onboarding of new customers compared to the previous subscription model [9] Group 2: Financial Performance - In the fiscal 2025 third quarter, C3.ai reported a record revenue of $98.7 million, reflecting a year-over-year increase of 26%, which is an acceleration from the previous year's growth rate of 18% [8] - The company closed 47 new agreements during the same quarter, marking a 74% increase from the prior year, and is collaborating on a joint sales campaign with Microsoft Azure targeting 621 potential accounts globally [7] - Despite the revenue growth, C3.ai's GAAP net loss increased by 10% year over year to $80.2 million, although the non-GAAP loss was significantly lower at $15.7 million due to the exclusion of stock-based compensation [11] Group 3: Market Valuation and Future Potential - C3.ai's stock is currently trading 85% below its record high of $161, with a more reasonable price-to-sales (P/S) ratio of 9.4, indicating a potential value opportunity [14] - The addressable market for enterprise AI is projected to be worth $1.3 trillion by 2032, suggesting significant growth potential for C3.ai based on its current revenue levels [16] - As companies increasingly adopt AI technologies, many are likely to turn to third-party providers like C3.ai for cost-effective and efficient solutions, reinforcing the long-term value of AI software over hardware [15]