The whole AI scene is evolving, man. At one point, everyone was going nuts about the potential of artificial intelligence and tech stocks were flying high. Wall Street strategists were all like, “This is it, man! The stock market is gonna soar!” But now, investors are getting back to basics, focusing on the fundamentals, you know?
So, the other night, C3.ai, this AI software company, announced their earnings. Their stock had been on fire, up over 200% this year. But get this, they expect to make around $295 to $320 million in revenues by 2024, which is cool and all, pretty much in line with what Wall Street expected. But here’s the kicker, their operating income losses are projected to be around $70 to $100 million now. They used to predict losses of $50 to $70 million. And guess what? They don’t even expect to be profitable on a quarterly basis by the end of 2024 anymore.
According to the CEO, Thomas Siebel, they’re investing in generative AI, lead generation, branding, market awareness, and market and customer success related to generative AI solutions. It’s a whole new game plan, man. But investors didn’t dig it, and the stock dropped more than 15% when the market opened on Thursday. It later recovered a bit, but still, a 12% loss is no joke.
JPMorgan analyst Pinjalim Bora ain’t too thrilled either. In a note, he said that the company’s revenue ain’t gonna skyrocket enough to justify all this investment in generative AI. Some other big players in AI, like Microsoft, Snap, and AMD, also saw their stocks take a hit recently. Like, for Microsoft, the AI contributions to revenue are gonna be a slow burn, man. And Snap, well, the rising cost of AI investment was a buzzkill for their shares. Even AMD, which is all about AI accelerators reaching over $150 billion by 2027, made analysts think expectations might be too high.
It seems like we’re in the “show me” stage, as Citigroup’s Scott Chronert puts it. He believes that the influence of AI on S&P 500 earnings in the long run is still important, but expectations need to simmer down and adjust to reality, you know?
But even companies that are actually proving AI’s impact on their business ain’t seeing their stocks shoot through the roof. Take Nvidia, for example. They crushed it in the recent quarter, with adjusted earnings up a whopping 429% compared to last year. And they’re projecting next quarter revenue to be around $16 billion, which is almost 30% higher than what Wall Street expected. But their stock only rose by 0.1% the next day. Since they reported earnings on August 23, their shares have gone down about 3%.
So, man, even if companies are showing that AI is changing the game for them, their stock prices ain’t insane like they were before. People are wondering if the AI rally has run its course, if stock valuations are just too damn high.
Oh, and check this out, there’s a photo of Nvidia CEO Jensen Huang. This dude is making moves in the AI world, speaking at the Taiwan Semiconductor Manufacturing Company. Big things are happening, man.
Alright, that’s all the scoop for now. This is Josh Schafer reporting for Yahoo Finance. Keep an eye on the latest stock market news and in-depth analysis, ’cause you don’t wanna miss a thing. And hey, don’t forget to read the freshest financial and business news from Yahoo Finance, man. Stay tuned!