C3.ai (NYSE: AI) stock rushed out of the gate Tuesday morning, gaining 13.2% through 9:50 a.m. ET after announcing a “strategic alliance” with software powerhouse Microsoft.
Highlighting each company’s respective strengths, artificial intelligence (AI) applications specialist C3.ai and artificial intelligence server farm operator Microsoft say they will work together “to enhance existing capabilities and introduce new innovations that help our mutual customers maximize delivery of high-value enterprise AI solutions with Azure.”
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
More specifically, Microsoft intends to integrate C3.ai’s enterprise AI application software into the Microsoft Commercial Cloud Portal, align C3’s apps with new capabilities from Azure, and work together to both market and deliver C3’s products to customers.
Going forward, Microsoft will be “the preferred cloud provider for C3 AI offerings.” And vice-versa, too, C3.ai will be “a preferred AI application software provider on Microsoft Azure.”
But do note the details. As you’d expect in a relationship between a smaller company like C3, with a $3.8 billion market capitalization, and a titan like Microsoft, whose market cap exceeds $3 trillion, Microsoft is becoming “the” preferred provider for C3 apps, but C3 is only going to be “a” preferred provider for Microsoft.
Seems to me, that’s probably a distinction with a difference. It suggests C3.ai investors may be overreacting just a wee bit to today’s news.
Consider: In the same press that announces this new alliance, C3 also notes that it’s actually already in a strategic alliance with Microsoft — as has been the case for the last six years. Note, too, that today’s press release contains no actual numbers, no predictions of new revenue or profits for C3 that will arise from this new alliance. Last but not least, be aware that despite having an existing alliance with Microsoft, C3 lost $280 million last year, and is expected to keep losing money as far out as analysts are making estimates.
C3.ai remains a risky stock, and is no buy.
Before you buy stock in C3.ai, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and C3.ai wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
