C3.ai Stock News: After 33% rally, AI shares backtrack ahead of earnings

• C3.ai stock sinks over 7% in Wednesday's premarket.
• AI stock rose 33% on Tuesday after Nvidia news.
• C3.ai reports fiscal Q4 earnings after the close on Wednesday.
• The market expects a slight drop in revenue YoY.

C3.ai (AI) stock slipped 7.6% to $41.62 in Wednesday’s premarket ahead of quarterly earnings expected after the close. This may just be traders taking profits after Tuesday’s 33.4% surge in the AI stock price.

NASDAQ 100 futures are off 0.2% in the premarket as the market worries over a slowing Chinese economy based on soft purchasing managers’ data released on Wednesday. A Citigroup analyst on Tuesday wrote a client note saying long positions in NASDAQ 100 futures are now at a three-year high, making the market biased toward profit-taking.

C3.ai stock news: Software company benefits from artificial intelligence rally

C3.ai is a software company that runs a big data platform using artificial intelligence for enterprise customers.

Since everything related to artificial intelligence is running gangbusters lately, it is no wonder that C3.ai stock is part of the bandwagon. Nvidia (NVDA), the leading maker of semiconductors that power the AI space, issued seven press releases in a 24-hour period to start this week. Then NVDA shares rallied enough on Tuesday to make the company the fifth trillion-dollar stock.

While there are a number of AI startups, and the most famous one – OpenAI – is largely controlled by Microsoft (AI), investors are running rampant to place their loose dollars in any publically-traded stock attached to the space. That is largely why C3.ai and its relatively minuscule operation have been attracting so much interest. 

The stock is up 297% this year despite the expectation that it will post a 1.4% drop in YoY revenue during its earnings call Wednesday evening. Wall Street expects a GAAP earnings per share loss of $0.66 on $71.34 million in sales for the fourth fiscal quarter, which ended April 30. CEO Thomas Siebel, for his part, predicted one month ago that revenue would arrive slightly above $72 million.

While the expectations are quite limited, the market will look for further color regarding the current quarter as Siebel has said that deals and pilot partnerships are beginning to accelerate.

C3.ai stock forecast

It looks like C3.ai stock may be in a period of consolidation after such an extreme runup. It is trading just above the R2 resistance at $38.83. The period is unlikely to last the rest of the week however. Earnings news will likely send the stock in a sharp move in either direction. A good call could send AI shares up to the $50 level, where it last experienced resistance in November 2021, while a poor announcement or outlook would likely send C3.ai stock down the 50-candle moving average on the 4-hour chart near $28. That support level makes sense since it’s just above the S1 at $27.61.

AI 4-hour chart