C3.ai Inc. (NYSE: AI), BigBear.ai Holdings Inc. (NYSE: BBAI) and SoundHound AI Inc. (NASDAQ: SOUN) shares extended their rally in last session as artificial intelligence became a new buzzword on Wall Street thanks to the viral success of the ChatGPT chatbot, which piqued the interest of retail investors.
Software firm, C3.ai (AI) dropped 2.07% in pre trading session on Tuesday, analytics firm BigBear.ai jumped nearly 21% and conversation artificial intelligence company SoundHound surged 40% previous session. The three small-cap companies’ tickers were among those being circulated on stocktwits.com, an investor-focused social media platform.
“Any company that mentions ChatGPT or anything about AI sees this rally… it’s just the hot buzzword of the month,” said Triple D Trading trader Dennis Dick. The success of OpenAI’s ChatGPT, which attracted a multibillion-dollar investment from Microsoft Corp, has investors on the lookout for companies developing AI-related technologies.
According to a UBS study released last week, ChatGPT is estimated to have reached 100 million monthly active users in January, just two months after its launch, making it the fastest-growing consumer application in history. This year, the value of C3.ai and SoundHound has more than doubled, while BigBear.ai has increased by more than 700%. According to Matthew Unterman, director at analytics platform S3 Partners in New York, the price increase was due to long buying as investors moved into AI stocks rather than any significant short covering.
C3.Ai Has a Significant Opportunity Ahead Of It
Management expects the addressable market for enterprise AI to exceed $596 billion by 2025, but based on Ark Invests forecast for the AI industry as a whole, this may be far too conservative. C3.ai’s shares have already risen 154% in 2023, indicating that investors are beginning to recognize the opportunity it provides. The current wave of AI hype generated by the conversational platform ChatGPT, as well as the start of a recovery in the Nasdaq-100 tech stock index, has certainly aided.
As it transitions its revenue model and rides the AI wave, C3.ai is in good financial shape. Because it is still heavily investing in customer acquisition to fuel growth, it reported a net loss of $140 million in the first half of fiscal 2023. However, with $840 million in cash, equivalents, and short-term investments on its balance sheet, it has plenty of room to grow in the coming years.
Despite its massive run this year, the stock is still down 82% from its all-time high. According to Ark Invest, it is not too late for investors to invest, especially given the AI industry’s potential between now and 2030.
