C3.ai Inc. (NYSE: AI) experienced a significant increase in its stock price early Wednesday, fueled by reports suggesting the company is engaged in merger discussions with Automation Anywhere. This purported transaction, if completed, would involve Automation Anywhere acquiring C3.ai and subsequently entering public markets, underscoring the robust interest surrounding the enterprise artificial intelligence industry.
Known primarily for its enterprise AI software solutions, C3.ai counts prominent clients such as the U.S. Air Force among its user base. The company is actively exploring strategic alternatives after the departure of its founder and former CEO, Thomas Siebel. At this time, C3.ai has not issued any official statement in response to requests for comment regarding the potential deal.
The recent surge follows C3.ai's December quarterly earnings announcement, where it reported a narrower loss per share than expected, at 25 cents, alongside a slight revenue outperformance, achieving $75.15 million. Company executives highlighted strong growth within its federal sector business as a primary driver of positive performance during the period.
Despite this encouraging short-term development, C3.ai's stock continues to demonstrate signs of longer-term challenges. Currently trading about 4.2% above its 20-day simple moving average, the stock remains 10.8% below its 100-day moving average, indicating modest short-term momentum amid a downward trend over the intermediate term. Over the preceding year, C3.ai shares have declined approximately 61.82%, positioning the stock closer to its 52-week lows than its highs.
Technical indicators provide a nuanced view of market sentiment. The Relative Strength Index (RSI) is near the neutral level at 37.44 but is progressing toward oversold status. Concurrently, the Moving Average Convergence Divergence (MACD) indicator remains below its signal line, typically interpreted as bearish pressure exerted on the stock price. The combination of an approaching oversold RSI and the bearish MACD suggests mixed to cautious momentum among investors.
Analysts identify key technical thresholds at $14.50 as resistance and $13.00 as support. These levels may serve as important markers to observe in forthcoming trading sessions, particularly as the company's strategic direction becomes clearer.
C3.ai's business model revolves around providing enterprise artificial intelligence technologies through software-as-a-service platforms. Its offerings are segmented into three primary divisions: the C3 AI Platform, which facilitates the end-to-end development and deployment of AI applications; C3 AI Applications, a suite of pre-built, extensible industry-specific AI software packages; and C3 Generative AI, which integrates large language models to enhance AI utility.
Looking forward, the market's attention turns toward C3.ai's anticipated earnings announcement scheduled for February 25. Expectations include an estimated loss per share of 46 cents, a decline from the 12-cent loss posted in the previous year. Revenue projections stand at approximately $75.87 million, representing a downward trend from $98.78 million year-over-year.
The current analyst consensus rates C3.ai stock as a Hold, with an average price target of $26.41. Recent analyst recommendations reflect differing views: Wedbush maintains an Outperform rating with a target price of $20.00, DA Davidson holds an Underperform rating supporting a $13.00 target, and Canaccord Genuity keeps its Hold rating at a $16.00 price objective.
On the trading floor, C3.ai shares gained 5.08%, trading at $13.24 at the time of reporting. This upward movement reflects investor response to the potential acquisition news and evolving market dynamics in enterprise AI.