Is it time to buy C3.Ai stock after winning a $500 million US DoD contract?

on Dec 14, 2021
  • C3.Ai shares on Monday fell by nearly 4%, trimming Friday’s gains.
  • The stock surged by more than 12% Friday morning before declining for a net session gain of about 5%.
  • C3.Ai announced a major US Department of Defense contract win of $500 million Thursday after the close.

On Monday, enterprise artificial intelligence solutions provider C3.Ai Inc. (NYSE:AI) shares declined by nearly 4%, trimming Friday’s gains. The stock rocketed more than 12% on Friday morning before shedding the gains to a net session gain of about 5%. C3.Ai announced a major U.S. Department of Defence (DoD) contract win worth $500 million on Thursday after the close.

The 5-year production agreement will allow the artificial intelligence company to accelerate the timeline for acquiring the suite of enterprise AI products while allowing the DoD agency to acquire company products for modelling and simulation.

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Enterprise AI is one of the most promising segments of the artificial intelligence market due to its ease of commercialization.

Should you bet on C3.Ai’s growth?

From an investment perspective, C3.Ai shares trade at a steep price-sales ratio of 17.43, making the stock too expensive for value investors. 

However, analysts expect the company’s bottom line to improve by more than 20% this year before recovering further by nearly 15% next year. 

Therefore, the stock could be an interesting option for growth investors willing to overlook the short-term turbulence.

Source – TradingView

Technically, C3.Ai shares seem to have recently bounced off the oversold condition of the 14-day RSI to complete an upwards breakout from a descending channel formation.

Therefore, with shares far from reaching overbought conditions, investors could target extended gains at about $45.73, or higher at $59.26. On the other hand, if the decline continues, C3.Ai could find support at $20.76.

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