Is C3.Ai (AI) making money from Artificial Intelligence?

C3.Ai (AI) stock is trending and rising because of its name and ticker symbol. To explain, C3 uses the ticker symbol AI, the acronym for artificial intelligence.

In 2023, C3’s share price rose from $11.07 on 3 January to $38.97 on 20 July. Cynics will note that C3’s rise coincides with the media hysteria about AI and the enormous popularity of ChatGPT3. People are buying C3.Ai because it uses the acronym AI.

Notably, C3.Ai was the third-most discussed stock on Reddit’s infamous WallStreetBets thread on Reddit, Quiver Quantitative Exchange-Traded Funds (ETFs), City Index reports. Hence, C3.Ai is attracting attention.

Is C3.Ai the most overvalued stock in America?

I consider C3.Ai (AI) a horrible stock because its losses exceed its revenues. To explain, C3.Ai reported a quarterly operating loss of -$73.28 million and a quarterly revenue of $72.41 on 30 April 2023.

Similarly, C3.Ai reported a quarterly gross profit of $47.50 million on 30 April 2023. The quarterly gross profit fell from $54.95 million on 30 April 2022. Moreover, the quarterly operating loss grew from -$56.52 million on 30 April 2022. Plus, the quarterly revenues rose slightly from $72.31 million on 30 April 2023.

C3.Ai is experiencing little growth. It had a 0.13% revenue growth rate in the quarter ending on 30 April 2023. The quarterly revenue growth rate fell from 38.32% on 30 April 2022.

Skeptics will note that C3.Ai is not profiting from the AI boom.

Is C3.Ai (AI) making money?

Despite its popularity, C3.Ai (AI) is making no money. For example, it reported a quarterly operating cash flow of $27.05 million on 30 April 2023. However, the quarterly operating cash flow rose from -$13.16 million on 30 April 2022.

Similarly, C3.Ai reported a quarterly ending cash flow of -$26.21 million on 30 April 2023. The quarterly ending cash flow fell from $135 million on 30 April 2022.

Plus, C3.Ai is borrowing a little money. It reported a quarterly financing cash flow of $3.07 million on 30 April 2023. Appealingly, C3.Ai reported no debts on 30 April 2023. The total debt fell from $31 million on 30 April 2022.

C3.Ai is investing money. It reported quarterly financing cash flows of $161.68 million on 30 April 2022 and $111.01 million on 31 October 2022. However, the quarterly investing cash flow fell to -$56.44 million on 30 April 2023.

What Value does C3.Ai offer?

I think C3.Ai (AI) has no value. To explain, C3.Ai had $731 million in cash and short-term investments on 30 April 2023. The cash and short-term investments fell from $961 million on 30 April 2022.

Moreover, C3.Ai’s total assets fell from $1.171 billion on 30 April 2022 to $1.103 billion on 30 April 2023. Hence, C3.Ai has less value even though its share price is rising.

Therefore, I conclude the only thing driving C3.Ai’s price surge is the acronym AI. Investors are buying C3.Ai because they see the letters AI. Thus, I think C3.Ai is one of the most overvalued stocks in America.

What is C3.Ai?

 C3.Ai (NYSE: AI) offers a comprehensive Enterprise AI application development platform. It also offers turnkey enterprise AI applications and a C3 Generative AI Product Suite.

For example, the US Air Force uses C3 AI Readiness in efforts to predict subsystem failures, optimize scheduled maintenance activities, identify high-risk aircraft subsystems, isolate potential root causes of failure, monitor inventory, monitor component life, identify necessary spare parts, streamline decision making by providing real-time access to data, and increase mission capabilities.

They claim C3 AI Readiness aggregate seven to 10 years of operation data from 10 to 12 sources and over 440,000 analytics by using 20 to 30 machine learning classifiers. C3 AI claims C3 AI Readiness can increase aircraft mission capabilities by 6%, reduce unscheduled maintenance by 40%, and reduce parts shortages by 35%. Plus, they claim Air Force commanders can use C3 AI to analyze equipment health.

Similarly, New York City utility ConEdison (NYSE: ED) is using C3.Ai’s Enterprise to support its Advanced Metering Infrastructure, or smart meters. They claim the C3 AI Platform and C3 AI AMI Operations applications on Amazon Web Services (AWS) cloud can help ConEdison analyze data from over four million customers and 5.3 million smart meters.

ConEdison’s long-term plans include a federated platform for analytics. The goal is to help ConEdison create a Smart Grid for New York City. To that end, C3.Ai is developing two machine learning algorithms and 50 analytics to identify deployment and installation issues and determine meter and network health. Highlights of the Advanced Metering Infrastructure include 13 Source Systems and over 180 Billion Rows of integrated data.

Why C3.ai cannot compete

If C3.ai’s claims about its capabilities are true. I think this company could make money in the future. However, I cannot see how C3.ai can compete against tech giants such as Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) which are moving into AI.

To explain, these companies’ resources far exceed C3.ai’s. For example, Amazon had $64.405 billion in cash and short-term investments on 31 March 2023, Alphabet had $115.102 billion on 31 March 2023, and Microsoft had $104.427 billion in cash and short-term investments on the same day.

Therefore, I think C3.ai (AI) cannot compete with the Big Three. Smart investors will avoid C3.ai because it has no offer. Buying a stock because of an acronym is stupid.

Unfortunately, Mr. Market is stupid enough to buy a stock for its acronym. Hence, the only people who will make money from C3.ai are the speculators who short its stock.