Should You Forget C3.ai and Buy These 2 AI Stocks Instead?

Core Viewpoint - C3.ai's stock has declined significantly since its IPO, and while there are signs of recovery, potential investors are advised to consider more stable alternatives like Micron and IBM due to C3.ai's ongoing challenges [1][2][6]. Group 1: C3.ai Overview - C3.ai went public at $42 and peaked at$177.47 shortly after, driven by its enterprise AI algorithms and rapid growth [1]. - As of now, C3.ai's stock trades below its IPO price, reflecting a slowdown in growth and increasing losses, with revenue growth dropping from a compound annual rate of 40% to just 6% in fiscal 2023 [2]. - Revenue for fiscal 2024 increased by 16%, with expectations of further growth between 19% and 27% in fiscal 2025, and analysts project a compound annual growth rate of 20% from fiscal 2024 to fiscal 2027 [3]. Group 2: C3.ai Risks - C3.ai generates over 30% of its revenue from a joint venture with Baker Hughes, which is set to expire at the end of fiscal 2025 without renewal [5]. - The company anticipates remaining unprofitable while developing new generative AI tools [5]. - C3.ai has experienced instability in its financial leadership, having changed CFOs three times since its IPO, leading to inconsistencies in customer counting and subscription models [5]. Group 3: Micron Overview - Micron manufactures DRAM and NAND memory chips, producing denser chips essential for AI applications, despite not being the largest player in the market [7][8]. - In fiscal 2023, Micron's revenue fell by 49% due to a cooling PC market and shifts in chip demand, but it rebounded with a 62% revenue increase in fiscal 2024, returning to profitability [9][10]. - Analysts expect Micron's revenue and adjusted EPS to grow by 52% and 587%, respectively, in fiscal 2025, indicating significant upside potential [11]. Group 4: IBM Overview - IBM's revenue declined from $107 billion in 2012 to$55 billion in 2020, but it has since recovered, with revenue and EPS growing at compound annual rates of 4% and 9% from 2020 to 2023 [12][13]. - The recovery was aided by the spin-off of its slower-growth IT infrastructure services and a focus on expanding Red Hat's presence in hybrid cloud and AI markets [13][14]. - From 2023 to 2026, analysts expect IBM's revenue and EPS to grow at compound annual rates of 4% and 5%, respectively, with the stock reasonably valued at 21 times forward earnings and a dividend yield of 3% [15].