1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $30 and Hold for 10 Years

1 No-Brainer Artificial Intelligence (AI) Stock to Buy With  and Hold for 10 Years

Artificial Intelligence (AI) is relatively new to most businesses, but not to C3.ai (NYSE:IA). It has been developing this technology since 2009 and was one of the first enterprise software providers in the growing AI sector.

Today, companies across 19 industries are using C3.ai to accelerate their adoption of AI, and the company’s revenue growth is accelerating as demand increases.

C3.ai stock is currently trading at $25.90, but the proliferation of AI could send it significantly higher in the long term. Here’s why investors with spare cash – money they don’t need for immediate expenses – might want to allocate at least $30 to this opportunity.

1 No-Brainer Artificial Intelligence (AI) Stock to Buy With  and Hold for 10 Years

Image source: C3.ai.

A unique game in the enterprise AI sector

Cloud software giants like Amazon And Microsoft have become synonymous with AI as they offer businesses a choice from hundreds of ready-to-use solutions. major language models (LLM) which they can use to create their own applications.

C3.ai’s strategy is a little different. It provides more than 40 turnkey AI applications that businesses can integrate directly into their operations. Additionally, C3.ai can customize them on request to meet specific needs. For example, manufacturers use C3.ai to forecast revenue, manage costs, and even predict equipment failures to reduce potential downtime.

Likewise, the oil and gas giant Shell uses C3.ai’s applications to monitor thousands of pieces of equipment to know when to perform preventative maintenance, because outages can be catastrophic, not only to the business’s bottom line, but also to the environment. C3.ai’s real-time production optimization software also helps Shell optimize pressure, temperature and flow rates at its liquefied natural gas plants, resulting in a substantial reduction in carbon emissions.

During the fourth quarter of fiscal 2024 (ended April 30), C3.ai recorded 487 customer engagements, representing a 70% increase over the year-ago period. It has closed 115 deals through its partnership network alone, which includes tech giants like Amazon and Microsoft, which offer C3.ai’s applications to their customers in the cloud.

It’s a win-win situation for all parties: C3.ai has access to a much larger base of potential customers and its partners benefit from more AI options on their platforms to satisfy their enterprise customers.

C3.ai revenue continues to accelerate

Two years ago, C3.ai changed its revenue model to fuel long-term growth. Previously, it billed its customers on a subscription basis, which required lengthy negotiations over contract length and pricing. Now it uses a consumption model so businesses can come and go as they please and only pay for what they use, creating a smoother and faster onboarding process.

C3.ai warned investors that this would cause a temporary slowdown in its revenue growth while it converted existing customers to the new model, as it takes time to increase consumption. In the third quarter of fiscal 2023 (ended January 31, 2023), the company’s revenue Shrunk 4% on an annual basis.

But since then, and in line with management’s forecasts, C3.ai’s revenue growth has accelerated convincingly:

A line chart showing C3.ai's accelerating revenue growth rate over the past five quarters. A line chart showing C3.ai's accelerating revenue growth rate over the past five quarters.

Image source: C3.ai.

Revenue was $86.6 million in the fourth quarter, a record high, and the 20% growth rate was the fastest in almost two years. The company’s forecast for the first quarter of fiscal 2025 (ending July 31) suggests growth could accelerate further to 23%.

Why C3.ai Stock Is an Obvious Long-Term Buy

First of all, it’s important to point out that C3.ai continues to lose money. Its net loss was $72.9 million in the fourth quarter, an increase from the same period last year as the company spent more money on operating costs (mainly in marketing) to stimulate sales. On a non-GAAP basis, which excludes one-time, non-cash expenses like stock-based compensation, C3.ai’s loss was $14 million, which is a bit more palatable.

The company has $750.3 million in cash, equivalents and marketable securities on its balance sheet, so it can afford to sustain its losses for the foreseeable future, but it will eventually have to prove to investors that it can generate a profit to support the acceleration of its income. growth.

On the other hand, Wall Street forecasts suggest that AI could add between $7 trillion and $200 trillion to the global economy over the coming decade. Capturing as much value as possible could generate substantial long-term rewards for investors. So it’s not necessarily a bad thing that C3.ai is foregoing short-term profitability in favor of aggressive spending to acquire customers.

C3.ai stock hit an all-time high of $161 shortly after its 2020 IPO, so its current price of $25.90 represents an 83% decline. To be clear, the company’s valuation was completely irrational at the time, but since then it has only increased its revenue and customer base. Moreover, its opportunities in the field of AI have never been greater.

Therefore, this could be a great opportunity for investors to buy C3.ai with the intention of holding it for the next decade as the AI ​​story unfolds.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Amazon and Microsoft. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.

1 single stock of artificial intelligence (AI) to buy with $30 and hold for 10 years was originally published by The Motley Fool

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