- DA Davidson analyst Gil Luria reiterates C3.ai Inc (NYSE:AI) with a Buy and a $30 price target.
- Luria hosted a webinar on Thursday with C3.ai's CEO, Tom Siebel, and came away with rich detail on the nature of the company's relationship with Baker Hughes Co (NASDAQ:BKR) in a Monday note titled "C3.ai, Creating Google for the Enterprise Data."
- Luria heard about C3.ai's unique positioning in the predictive intelligence space and his thoughts on the opportunity.
- Luria continues to view C3.ai's new Generative AI products as transformational for the enterprise that will boost demand for C3.ai's platform and consumption rates.
- The Baker Hughes joint venture with C3.ai began in 2019, resulting in Baker Hughes adopting and marketing C3.ai products. In addition, Baker Hughes took a 12% equity stake in C3.ai at its current market value (C3.ai was then private). The initial deal with C3.ai involved spending $320 million over three years.
- C3.ai amended the terms of the commitment several times to extend the relationship's timeline and committed spending levels with C3.ai.
- The Baker Hughes relationship remains strong, with the company presenting a keynote at C3 Transform 2023 detailing its plans to expand its use of the C3 platform.
- C3.ai's transition to a consumption model has gone well, and Siebel expects growth to accelerate over the next year.
- Professional services will be limited to 15-20% of revenue, supporting continued substantial gross margin.
- The critical differentiator between C3.ai and its competitors is its investment in the platform and, specifically, its model-driven architecture.
- This investment drives faster time to value for customers who build ML models through C3.ai or purchase one of C3.ai's 42 turnkey applications rather than creating a solution internally.
- C3.ai has been interested in generative AI technologies since 2020. The product creation catalyst happened when C3.ai had to create "Google for the Department of Defense."
- C3.ai was ready and delivered Generative AI for enterprise search while incorporating its functionality throughout the platform.
- The key C3.ai twist uses an LLM in conjunction with a retriever model. C3.ai can utilize LLMs for a non-obvious function beyond chat through its model-driven architecture.
- Predictive and generative intelligence is now top of mind for many CEOs and boards. The analyst views C3.ai as uniquely positioned to enable enterprises to derive value from their large corpuses of quality data.
- Price Action: AI shares traded lower by 2.01% at $22.38 on the last check Monday.
C3.ai's Innovative Approach: Analysts Envision Upside As Company Develops Enterprise Data Hub With Baker Hughes
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