C3.ai(US:AI) The Motley Foolยท2024-01-08 11:15Core Viewpoint - The major market indexes rebounded in 2023, with the Nasdaq Composite surging 43%, indicating a potential new bull market, particularly in the artificial intelligence (AI) sector, where C3.ai has shown significant growth potential [1] Group 1: Competitive Position - C3.ai has a unique position in the AI industry, claiming no direct competitors for its specific offerings, with founder Thomas Siebel stating unawareness of any competitive products from major players like Oracle [2] - The closest comparison is Palantir Technologies, but C3.ai focuses on AI applications and no-code software, while Palantir builds an intelligent operating system around data [2] Group 2: Growth Momentum - C3.ai has signed or expanded agreements with major organizations, including Nucor and the U.S. Navy, indicating strong demand for its application suite and potential for significant growth over the next decade [3] - Research from McKinsey suggests generative AI could add trillions to the economy, creating a vast addressable market for C3.ai as organizations seek to integrate AI into their operations [4] - After a revenue increase of 38% in fiscal 2022, C3.ai's growth slowed to 5.6% in fiscal 2023, but it rebounded with a 17% year-over-year growth rate in the quarter ending in October, with analysts projecting a 14.7% revenue increase in fiscal 2024 and 19.8% in fiscal 2025 [4] Group 3: Valuation and Investment Opportunity - C3.ai's stock is currently trading at a more attractive valuation, with a forward price-to-sales ratio of 11, which is considered fair for a fast-growing software company [6] - The recent pullback in share price presents a potential buying opportunity, as many companies are delaying AI spending while they determine how to implement AI applications [6] - Despite being a mid-cap growth stock with a high-risk profile and not yet profitable, the accelerating revenue growth and new customer agreements are positive indicators for long-term potential [6]