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by:
Archie Cheishvili
February 13, 2023

Analyzing the best Artificial Intelligence stocks

Have you thought about investing in AI companies?

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With the increasing demand for AI services and the development of new technologies, investing in AI stocks has become a hot topic among investors.

 

However, picking the best AI stocks is not an easy task. In this article, we will analyze the best AI stocks to buy in 2022.

 

First of all, let's take a look at the definition of AI. AI (artificial intelligence) is the ability of machines to perform tasks that ordinarily require human intelligence, such as understanding natural language and recognizing objects.

 

Nowadays, AI is used in various fields such as finance, healthcare, manufacturing, and logistics. The application of AI has made our lives more convenient and efficient. For example, chatbots are widely used in customer service to provide 24/7 assistance; self-driving cars are being developed to reduce traffic accidents, and robots are being used in factories to improve productivity.

 

Why investing in AI stocks makes sense?

 

There are several reasons why investing in AI stocks is a good idea. First of all, AI is a rapidly growing industry. According to Transparency Market Research AI market is expected to grow from $210B in 2020 to $2.8T in 2030. This rapid growth is driven by factors such as the increasing demand for intelligent virtual assistants, the need for better decision-making, and the growth of big data. Secondly, many tech giants are investing heavily in AI. For example, Google has invested more than billions in AI over the past three years; Facebook has also set up an AI research lab and has been investing heavily in AI development. These tech giants' investments will help drive the development of AI technology and applications. Thirdly, AI has a wide range of applications. As mentioned earlier, AI is used in various fields such as healthcare, finance, manufacturing, logistics, and customer service. The increasing adoption of AI in different industries will be one of the drivers of the growth of AI stocks.

 

Cons of investing in AI stocks

 

However, like any other investment, there are also risks when investing in AI stocks. First of all, AI is a rapidly changing field and new technologies are constantly being developed. This makes it difficult to pick the best AI stocks as the landscape is constantly changing. Secondly, many AI startups are loss-making and their business models have not been proven yet. This means that there is a higher risk when investing in these stocks. Thirdly, there are regulatory risks as well. For example, the European Union has introduced strict regulations on the use of AI which may impact the development of AI companies.

 

Despite the risks, we believe that investing in AI stocks is a good idea as the industry is growing rapidly and there are many potential applications of AI.

 

How to invest in the best artificial intelligence stocks in 2022?

 

There are several factors to consider when investing in AI stocks.

 

First of all, it is important to choose a reputable broker. Make sure to do your research and select a broker that is best suited for you.

 

Secondly, it is important to have a clear investment strategy. Be clear about your goals and objectives before making any investments.

 

Thirdly, diversification is key. Don't put all your eggs in one basket. Spread your investments across different sectors and industries to mitigate risk.

 

Fourthly, be patient. Don't expect to see immediate results. Investing is a long-term game.

 

Last but not least, do your own research. This is perhaps the most important factor. Don't rely on tips from others. Do your own research and due diligence before making any investment decisions.

 

Best Artificial Intelligence stock analyzed:

 

C3.AI overview

 

 

C3.ai is a leading enterprise AI software company. It enables organizations to build and operate AI applications at scale.

 

C3.ai offers a comprehensive and integrated platform that enables organizations to develop, deploy, and operate AI applications.

 

The company has a strong focus on the enterprise market and works with some of the world's largest companies, such as Shell, GlaxoSmithKline, Airbus, Siemens, and Walmart.

 

C3.ai went public in December 2020 and is listed on the New York Stock Exchange under the ticker symbol "AI."

 

 

Team

 

 

C3.ai has a strong team with a wealth of experience in AI, big data, and cloud computing.

 

The company is led by Tom Siebel, who is the current CEO. Siebel is a serial entrepreneur and one of the pioneers of the CRM software industry. He also has a deep understanding of AI and big data business-wise. Tom Siebel built large companies which had more than 7,000 employees. He is very experienced in building tech companies. His superpower is enterprise sales. However, he is not as much of a visionary as Elon Musk nor is he famous for his technical acumen.

 

President and Chief Technology Officer Edward Y. Abbo graduated from MIT and worked with Tom Siebel before. The fact that Tom and Edward have worked before is a major strength of C3.ai. However, Edward's expertise is in Mechanical Engineering primarily; he is not well-known in AI research space. His technical contributions toward AI is very limited although it seems like he is able to hire smart AI scientist. The team that is the most similar to C3.AI's team is Salesforce's team. Salesforce was also founded by salespeople, not engineers. Do engineers find more successful companies than business people do?

 

 

AI Market

 

 

The market is probably one of the most exciting aspects of C3.AI. AI is poised to change the world and if you want to be part of AI revolution C3.AI might be a good way to get exposure to AI.

 

According to Transperancy Market Research AI market is expected to grow from $210B in 2020 to $2.8T in 2030.

 

This rapid growth is driven by factors such as the increasing demand for intelligent virtual assistants, the need for better decision-making, and the growth of big data.

 

C3.ai is well-positioned to capitalize on this growth. The company has a strong focus on the enterprise market and works with some of the world's largest companies.

 

In addition, C3.ai has a comprehensive and integrated platform that enables organizations to develop, deploy, and operate AI applications.

 

Financials

 

 

C3.ai is a publicly-traded company with a market capitalization of $1.42B as of October 28th, 2022 according to Yahoo Finance. Currently, the stock price is down by around 90% from its highs. This might indicate that it might be a good time to buy. On the other hand, there are questions about the speed of revenue growth and whether in the long term C3.AI will reach profitability (at the moment they have negative margins).

 

The company went public in December 2020 and is listed on the New York Stock Exchange under the ticker symbol "AI."

 

The company's growth has been mediocre in 2022 and its operating expense is almost twice as much as its revenue. This is mainly to do with the enormous sales force that C3.AI employs. Each salespeople might be bringing less revenue to the company compared to their salaries.

 

We believe that C3.AI will reach profitability in the future when the economy recovers; however, the next few years will remain challenging and the company most likely will continue losing money. There is a risk of solvency or substantial dilution and downward price pressure in case they sell a substantial amount of their stock to meet their financing needs.

 

Based on this, C3.AI's valuation is close to fair. The risk most likely does not justify buying the stock at this level. However, if the price goes down by another 20%+ we believe that C3.AI will be a great buy.

 

Julian Lin on Seeking Alpha does a detailed financial analysis of C3.AI to learn more.

 

Alessio Pace on Seeking Alpha came up with a similar conclusion as us. He points out that risks might be too high at the current levels to invest in C3.AI.

 

Looking ahead, C3.ai is well-positioned for continued growth. The company has a strong team with a wealth of experience in AI, big data, and cloud computing.

 

Product potential

 

 

C3.ai has a strong product portfolio with a wide range of applications.

 

The company's products are used by some of the world's largest companies, such as Shell, GlaxoSmithKline, Airbus, Siemens, and Walmart.

 

C3.ai also has a comprehensive and integrated platform that enables organizations to develop, deploy, and operate AI applications.

 

Conclusion

 

 

C3.ai is a well-positioned company with a strong team and a comprehensive product portfolio. However, the company is unprofitable and its stock price has declined substantially in recent months. We believe that the risk does not justify buying the stock at this level but it might be a good buy if the price declines by another 20%+.

 

If you would like to get exposure to AI it might be wiser to invest in private AI companies like GenesisAI. Their valuation is a lot less than C3.AI's and they have a strong team (Harvard PhD, ex-Salesforce Engineer, etc). They have over 4,000 investors. You can learn more about GenesisAI on Netcapital.

 

For further reading, Anthony Di Pizio on Motley Fool provides an excellent analysis of why it might be a good idea to add C3.AI to the portfolio.

 

Disclaimer: The following is not financial advice. Do your own research.

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