To The Moon

Is the AI Trend Over? I don't think so. It’s not simply a reaction of one or two stock.

Although $C3.ai, Inc.(AI)$ has plunged sharply this week with a pullback of nearly 40%. The company benefits from having the loudest name in the industry "AI", exposure and traffic boost, but its actual business capabilities are not outstanding in the industry and its valuation level is far higher than the industry average. The current volatility still reflects characteristics of "meme" stocks.

Our previous report C3.AI: A Godblessing Ticker Means Everything

To summarize,

• On March 3rd, C3.ai announced Q4 results that exceeded market expectations, but in the previous quarter, the company lowered guidance so it was not really performing well; it was just expected management;

• The company's revenue has been declining over several quarters and profit margins are uncertain due to increased cost spending. Profitability prospects have yet to be seen;

• The company is essentially an intermediary service agency using ChatGPT technology which is expensive, outdated and difficult to implement compared to many alternative solutions on offer;

• There has been significant sales team turnover indicating fundamental leadership issues;

• An important sales partnership signed with energy services giant Baker Hughes appears to be falling apart.

• On March 6th Kerrisdale Capital shorted C3.ai - click here for their short report - also accusing them of these same issues.

As this small-cap stock currently valued at less than $2.5 billion already has a relatively high short ratio (28%), it is clearly another meme stock like $GameStop(GME)$ or $AMC Entertainment(AMC)$ without any fundamentals or valuations whatsoever; completely driven by retail investors (and some aggressive institutional investors).

One-third of trading volume comes from liquidity service providers meaning that retail speculative trading sentiment is strong.

Therefore,

If you are a meme stock speculator, you can completely regard C3.ai as an important participating target and buy low and sell high depending on your skills.

If you just want to be a value investor in the AI concept, please turn to underlying hardware companies such as $NVIDIA Corp(NVDA)$ and $Advanced Micro Devices(AMD)$ or software development companies like $Microsoft(MSFT)$ or $Alphabet(GOOG)$ .