The artificial intelligence industry is maturing.
After a frenzy over the potential of AI sent tech stocks soaring over the summer, and some Wall Street strategists boosted the broader stock market outlook, investors reverted to focusing on fundamentals.
The latest iteration unfolded Wednesday night when C3.ai (AI) reported earnings, whose stock has surged more than 200% this year.
Artificial intelligence software firm C3.ai expects 2024 revenue to be in the $295 million to $320 million range, broadly in line with Wall Street’s $308 million forecast. Stated. However, the company now expects operating loss to be in the range of $70 million to $100 million. The company had previously expected losses of $50 million to $70 million. Also, by the end of 2024, it is not expected to be profitable on a quarterly basis.
“We have decided to invest in generative AI, invest in lead generation, invest in branding, invest in market awareness, invest in market and customer success related to generative AI solutions.” said C3.ai CEO Thomas. Siebel told investors at an earnings call.
Shares fell more than 15% shortly after the opening bell on Thursday morning, after which losses were capped at about 12%.
“I can’t see the top line metrics [revenue] It could rise significantly at the moment to justify a stronger investment stance [on generative AI]JP Morgan analyst Pinjarim Bora wrote in a note on Thursday.
C3.ai wasn’t the only company to feel a shift in market sentiment during its latest quarterly earnings report, which began in earnest at the end of July.
Investors sold shares in Microsoft (MSFT) a day after it announced that AI’s contribution to earnings would be gradual.SNAP stock plummets Rising AI investment costs weighed down KK. The same can be said for AMD (AMD), which has promised the market for AI accelerators to reach more than $150 billion by 2027, but analysts were concerned that expectations were too high.
Citigroup’s Scott Cronert recently told Yahoo Finance that the AI hype has entered the “show me” stage.
“I don’t think the AI trend and its long-term impact on S&P 500 earnings is at stake here,” Kronert said on Yahoo Finance Live. “I think it’s still an important part of the narrative going forward. But the expectations…we just have to give them room to adjust as previous events have unfolded, and now we have new We are considering further incremental information.”
Even companies that continue to show that AI is changing their business haven’t seen their stocks rise in the past month, raising questions about whether AI’s run has come full circle and stock valuations are too high. is occurring.
In its most recent quarter, AI darling Nvidia increased its adjusted earnings by 429% year-over-year. The semiconductor giant expects to generate about $16 billion in sales next quarter, nearly 30% higher than Wall Street analysts expected.
The stock rose just 0.1% in trading the next day. Nvidia stock is currently down about 3% since its earnings report on Aug. 23.
Josh Schafer is a reporter at Yahoo Finance.
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