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Points to Remember
C3.ai is delivering artificial intelligence to hitherto untapped markets.
UiPath helps businesses become more productive by automating repetitive operations.
Both equities are down more than 50% from their all-time highs, suggesting that they are currently properly valued.
Artificial intelligence (AI) will undoubtedly play a larger role in our lives in the next 20 years. According to a study conducted by IT giant Gartner, one-third of businesses intend to spend at least $1 million on AI in the next two years, with all businesses polled planning to invest some money on AI.
This should bode well for C3.ai (NYSE:AI) and UiPath (NYSE:PATH), two companies that provide artificial intelligence to businesses. Each firm offers a distinct service that aims to help clients utilize AI to get a competitive advantage over their peers, and with the widespread use of AI in the workplace, these two companies should see significant growth in the future years.
C3.ai and UiPath are both trading at significant discounts to their all-time highs, which might present a good purchasing opportunity for investors. Here's why I believe these two equities will soar in the next years.
ai C3
C3.ai was a stock that had a lot of buzz leading up to its IPO, but after it went public, the euphoria faded rapidly. The stock has never come close to its IPO price, and it is presently trading at an 84 percent discount to its all-time highs. Shares also price at a low 10 times revenue multiple for an AI stock, indicating that the firm has room to grow over the next decade.
When a talented developer seeks work in artificial intelligence, they may hunt for positions in tech organizations such as Alphabet or Meta Platforms, but not at oil corporations, for example. However, there is still a huge need for AI in older businesses.
C3.ai delivers AI models to firms that may lack the "wow factor" when it comes to acquiring engineers and expertise. The company focuses on providing a comprehensive suite of AI models for large-scale enterprises, and it has reaped the benefits of doing so. Its second-quarter sales increased by 41% year over year (YOY) to $58 million.
The oil sector is the company's principal source of income, but it is spending aggressively to grow into other areas such as utilities and manufacturing, both of which have the potential to heavily rely on AI in the future decade. C3.ai invested $83 million in the first two fiscal quarters alone to develop a brand identity, so when businesses realize they need AI to stay competitive, C3.ai may be the first firm they turn to. In Q2, the firm had a 63 percent year-over-year increase in client growth, indicating that this investment is paying off, and it may continue as the globe adopts AI at a quicker pace.
Although the company's net income and free cash flow aren't very impressive, its balance sheet is robust enough to cover these losses. The firm produced $111 million in revenue in the first two fiscal quarters, but lost $94 million. Furthermore, its free cash flow was negative $20 million, but C3.ai's $1 billion in cash and assets on the balance sheet might allow it to continue investing in its brand and recruiting consumers.
All of this points to C3.ai having a bright future, which is why I believe the firm will begin to dominate the industry in the next years.
UiPath
While C3.ai focuses on giving a diverse set of AI solutions to underprivileged firms, UiPath wants to employ robots to improve the efficiency of all organizations.
UiPath is a pioneer in robotic process automation (RPA), which means it offers some of the best software automation technologies on the market for freeing up human employees to focus on more important activities while RPA automates routine office tasks. UiPath's AI isn't seeking to replace humans, but it can help them be more productive by executing low-skill jobs thousands of times quicker than humans can.
This form of AI has found widespread acceptance, and UiPath, as the industry leader, has followed suit. The firm now has over 9,360 clients and $818 million in yearly recurring income, and it is still growing at a rapid pace. Over 1,300 clients spend more than $100,000 per year, up 52 percent year over year.
The firm, like C3.ai, isn't finished yet. It is significantly spending in creating new goods and marketing to capitalize on the fast-growing market it sees ahead, resulting in a net loss of $123 million in the third quarter. UiPath's addressable potential is estimated to reach $30 million by 2024, a huge increase from today, and the company wants to maintain its leading position to take advantage of it.
As one of the two major players in the industry, I am optimistic that it will continue to grow in tandem with the market. Investors may be well rewarded if the firm continues to flourish, with shares trading at roughly 21 times revenues.
Is it worth it to put $1,000 into C3.ai, Inc. right now?
You'll want to hear this before you consider C3.ai, Inc.
Our award-winning research team recently released its list of the top ten companies for investors to purchase right now... and C3.ai, Inc. was not one of them.
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