'Walking the walk': C3.ai soars 19% after the AI software company reports big quarterly earning beat

• C3.ai shares soared Friday after the AI software maker posted better-than-expected Q3 results.
• The company's shares have surged this year as ChatGPT ignited interest in AI tools.

The corporate and investor interest in artificial intelligence technology was on display Friday, with a surge in shares of C3.ai as the AI enterprise software company delivered better-than-expected quarterly results and said it's seeing a "dramatic change" in its landscape.

C3.ai shares jumped 19% to $25.32, the highest since mid-February, following its latest financial results. The shares this year had already soared 90%, catching the attention of many investors after the company recently said it would integrate the popular ChatGPT chatbox into its lineup of AI tools.

"The overall business sentiment appears to be improving. This is a dramatic change from what we experienced in mid-2022," C3.ai CEO Thomas Siebel said in the company's third-quarter statement.

C3.ai posted an adjusted loss of $0.06 a share, narrower than the loss of $0.22 a share expected in a FactSet poll of analysts. Revenue of $66.7 million was above Wall Street's target of $64.2 million but lower than $69.8 million a year ago.

The company is "now walking the walk" in handing in quarterly figures that exceeded Wall Street's projections, Wedbush Securities analyst Dan Ives said in an early Friday note. He nearly doubled its C3.ai price target, to $24 from $13, and held its neutral rating.

"The company is starting to gain momentum in building significant enterprise opportunities in its pipeline with its suite of innovative enterprise AI solutions, but there are still some bumps in the road for C3.AI including the monetization strategy for its high-demand Generative AI suite which fundamentally changes the human interface for enterprise application," said Ives.

The company forecast fourth-quarter revenue of $70 million to $72 million, compared with Wall Street's projection of a little more than $70 million.

"The recent explosion of innovation and availability of large language models and generative free trading transformers are also immediately compatible with the C3 AI platform, enabling us to increase the utility of our platform and our applications," said Siebel. "We believe the importance of the ongoing developments in generative AI is difficult to overestimate."

C3.ai said it remained on track to become cash positive and profitable on an adjusted basis by the end of fiscal year 2024.