C3.ai plunged 10% after the company announced quarterly earnings on Feb. 26. The stock tried to get past its 21-day moving average on Wednesday, April 9, after President Donald Trump announced a temporary pause on tariffs. But shares are giving up some of those gains as they fall below the key level. Does that make C3.ai stock a buy or sell now?
The stock recovered from a rout in artificial intelligence stocks late January but has given back those gains now.
It may be tempting to buy the stock on a pullback, but chart tools and technical ratings show weakening action.
The enterprise software company announced quarterly sales rose 26% to $98.8 million in the third quarter ended Jan. 31, while a loss of 12 cents a share was a slight improvement from the prior year, when the company lost 13 cents per share.
Analysts polled by FactSet had estimated sales of $98.1 million with a loss of 25 cents per share.
In March, the company announced that its offerings were available on Amazon.com's "Amazon Web Services Marketplace for the U.S. Intelligence Community." The U.S. Intelligence Community is an AWS digital catalogue of software products from vendors that specialize in supporting government customers.
DeepSeek Hits C3.ai Stock
Shares dropped 5% on Jan. 27 after news that China's DeepSeek's artificial intelligence model costs just a fraction of its U.S. counterparts. That triggered a sell-off in AI stocks.
But the stock reversed higher the next day amid news that the enterprise AI software maker had won an "awardable" status as a vendor for the Department of Defense's Tradewinds Marketplace — the Pentagon's framework for sourcing, funding and developing solutions to challenges that emerge from artificial intelligence and machine learning applications.
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Trump's Infrastructure Plans Lift AI Stock
On the second day of his presidency, President Trump revoked a rule that required AI developers to declare the results of their safety tests to the government before making them public. While that may not have a direct bearing on C3.ai, the pro-AI move lifted the stock.
Shares also rose after Trump announced Stargate, a $500 billion plan to build AI infrastructure.
Earlier, the outgoing Biden administration released last-minute regulations in January that would impose huge restrictions on artificial intelligence chip exports. Ken Glueck, executive vice president at software database leader Oracle, noted that the restrictions "will turn the U.S. cloud industry upside down" and reduce the global chip market by 80% for U.S. chipmakers. AI stock fell 4.5% that day.
In November, shares rose after Goldman Sachs' 2025 forecast pointed to what it calls a Phase 3 shift in the AI revolution in which software and services companies generate revenue from AI applications. These offered investors longer-lasting growth and relied less on economic expansion or interest rates, Goldman said. Earlier phases focused on AI infrastructure.
CEO Warns Of AI Bubble
On Dec. 18, shares fell amid Chief Executive Thomas Siebel's warning about an AI bubble. Shares fell 7% and headed even lower the next day after an analyst downgrade, falling 10%.
Siebel noted in an interview on CNBC that markets were over-evaluating the AI technologies. "There is a bubble. When there are technological breakthroughs, the market tends to overvalue them," he said. He added that "it will correct at some point."
Meanwhile, KeyBanc Capital Markets analyst Eric Heath downgraded the stock to underweight from sector weight Dec. 19. He cited concerns about subscription revenue growth and revenue estimates that may be too high. The stock sold off 10.7% that day.
Microsoft Cloud Partnership
On Nov. 19, the AI play announced that Microsoft will extend its partnership and provide cloud computing services through Azure to the artificial intelligence company. AI stock soared 24.2%, it best day since May 30, 2023, when it rocketed 33.4%, according to Dow Jones Market Data.
Microsoft and C3.ai entered into a partnership in 2018 to provide enterprise AI services to several companies.
Shares of AI stock got a lift early November after election results triggered the Trump rally.
Relative Strength Falls For C3.ai Stock
C3.ai has a Relative Strength Rating of 19. Investor's Business Daily recommends focusing on stocks with an RS Rating of 80 or above.
Its November rally helped the stock outperform the S&P 500. The stock soared 51%, well above the S&P 500's 6% monthly gain. But in December, shares dropped 7% while the S&P 500 fell 2.5%.
In 2024, AI stock gained just 20%. The S&P 500 returned 23%.
Shares also underperformed the benchmark index in January, falling 9% while the S&P gained 2.7%. In February, C3.ai stock plunged 25% vs. the S&P 500's 1.4% loss. The S&P 500 fell 6% in March vs. AI stock's 10% loss.
Shift In Pricing Model
Industry trends have worked in C3.ai's favor. The stock skyrocketed Feb. 1, 2023, when users successfully tapped OpenAI's ChatGPT artificial intelligence app to generate answers, texts, emails and even write books.
The ChatGPT app reached 100 million monthly active users in two months, beating popular apps like TikTok and Instagram. OpenAI's app uses natural language to help users write emails, write code and find answers to daily questions.
There are other considerations. In December 2022, C3.ai changed its pricing model from subscription to consumption-based pricing.
The move brought the company in line with industry standards for software-as-a-service providers. The practice is common across Amazon.com's Amazon Web Services, Alphabet's Google Cloud and Microsoft's Azure, as well as smaller players.
Consumption pricing works like a utility bill. That is, the higher the consumption, the pricier the service. Since AI customers will benefit from having access to an AI enterprise platform with unlimited use and developer licenses, the switch to consumption pricing could drive revenue growth, but not immediately.
C3.ai CEO Siebel indicated the consumption-pricing model will also lower barriers to entry because companies do not have to be tied to long contracts.
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Is C3.ai Stock A Buy Now?
Redwood City, Calif.-based C3.ai makes software applications equipped with artificial intelligence that can be configured for different purposes.
The software can make networks more reliable by detecting fraud, balancing inventory and demand, solving supply-chain issues and increasing energy efficiency. It can also help defend against money laundering.
The enterprise software stock popped on its first day of trading, Dec. 9, 2020. Shares leaped from their initial public offering price of 42 to finish at 92.49 that day.
C3.ai stock is prone to drastic swings. On Nov. 20, 2023, C3.ai stock jumped more than 5% but reversed lower to close with a 4.3% loss when Sam Altman was ousted as chief executive from another artificial intelligence specialist, OpenAI.
Altman quickly returned to OpenAI, but the news apparently triggered speculative trading as the market continued to search for leaders in the space.
Ratings On C3.ai Stock
C3.ai stock holds a Composite Rating of 33 while the EPS Rating also lags at 39 due to the company's losses.
AI stock remains below the 50-day moving average while the relative strength line, which compares the stock with the S&P 500, has fallen to new lows.
Shares have also broken the 200-day moving average level of support and are facing resistance at the 21-day moving average.
Meanwhile, the Accumulation/Distribution Rating is at the lowest rating of E. That indicates that funds have been selling the stock in the recent 13 weeks.
AI stock also lags in its industry group, according to IBD Stock Checkup. The stock has to retake the 50-day line and form a new base before it becomes a buy again.
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