C3.ai Soars on Microsoft Partnership, But Is It Worth the Hype?
Tuesday morning saw C3.ai (NYSE: AI) stock surge by 13.2% after announcing a strategic alliance with software giant Microsoft. This partnership brings together the strengths of both companies, with C3.ai specializing in artificial intelligence (AI) applications and Microsoft operating AI server farms.
A Match Made in Heaven?
The alliance aims to enhance existing capabilities and introduce new innovations that help mutual customers maximize delivery of high-value enterprise AI solutions with Azure. Microsoft will integrate C3.ai’s enterprise AI application software into the Microsoft Commercial Cloud Portal, align C3’s apps with new Azure capabilities, and jointly market and deliver C3’s products to customers.
The Fine Print
Notably, Microsoft will become the preferred cloud provider for C3 AI offerings, while C3.ai will be a preferred AI application software provider on Microsoft Azure. However, it’s worth highlighting the distinction between “the” preferred provider and “a” preferred provider. This subtle difference may indicate that C3.ai investors are overreacting to today’s news.
A Deeper Look
C3.ai has been in a strategic alliance with Microsoft for the past six years, and today’s press release lacks concrete numbers or predictions of new revenue or profits. Furthermore, despite its existing alliance with Microsoft, C3.ai lost $280 million last year and is expected to continue losing money in the foreseeable future. This raises concerns about the stock’s riskiness.
A Word of Caution
Before investing in C3.ai, consider the bigger picture. The Motley Fool Stock Advisor analyst team has identified what they believe are the top 10 stocks for investors to buy now – and C3.ai didn’t make the cut. These 10 stocks have the potential to produce significant returns in the coming years. With Stock Advisor, investors can access a proven blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month.
A Safer Bet?
The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002. By considering alternative investment opportunities, investors may be able to minimize risk and maximize returns.
Leave a Reply