What Happened?

Shares of artificial intelligence (AI) software company C3.ai (NYSE:AI) jumped 6.1% in the morning session after market optimism around innovators in the software as a service (SaaS) space continued to improve following strong earnings from Salesforce. The enterprise software giant showcased clear progress in capturing demand for AI solutions, signing 200 deals within a week of launching Agentforce, its new AI platform for enterprise customers. In addition, Salesforce reported thousands more deals in the pipeline, hinting at robust future growth. 

Reviewing some of the numbers, Salesforce reported sales and adjusted operating income ahead of Wall Street's expectations. On the other hand, EPS and some top-line growth indicators, including billings and remaining performance obligations (RPO), fell slightly below consensus estimates, as products like Tableau, MuleSoft, and Slack revealed some weaknesses. Despite the mixed top-line result, CRM recorded double-digit growth in the Sales and Service Cloud segments, which is encouraging. 

Since the onset of the AI boom, Wall Street has been craving hard data to justify the lofty projections surrounding the industry's potential. The numbers are finally trickling in, and the data suggest the AI market's trajectory might exceed initial expectations, heralding the shift from speculative hype to tangible value creation.

After the initial pop the shares cooled down to $38.14, up 3.7% from previous close.

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What The Market Is Telling Us

C3.ai’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 15 days ago when the stock gained 18.2% on the news that the company announced a partnership with Microsoft to make its Enterprise AI solutions more accessible on the Microsoft Azure cloud platform. Both companies also planned sales and marketing sessions to develop strategies to promote the integrated solutions. Overall, the deal means C3.AI will be able to sell its AI solutions to more customers by leveraging the broad reach of Microsoft's cloud platform.

C3.ai is up 32.7% since the beginning of the year, and at $38.14 per share, has set a new 52-week high. Investors who bought $1,000 worth of C3.ai’s shares at the IPO in December 2020 would now be looking at an investment worth $412.35.

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