THREE AI STOCKS TO _WATCH

AS HEAVYWEIGHTS Google and Microsoft duke it out over AI, upstarts like C3.ai enjoy natural advantages

Don’t always go with the big names. When it comes to investing in artificial intelligence, legacy players like Microsoft (MSFT) and Google’s parent company, Alphabet (GOOGL), might not offer the top returns because they devote only a small portion of their portfolios to the sector. Some cryptocurrency AI projects, like Fetch.ai (FET) and The Graph (GRT), have strong management teams and seem ready to focus long-term on decentralized intelligence and Web3 protocols.

Despite its lofty valuation, NVIDIA (NVDA) will likely continue to outperform in positive momentum conditions. The company manufactures next-generation semiconductors to power artificial intelligence, self-driving vehicles and the future of the metaverse. C3.ai (AI) will continue to concentrate on enterprise-scale AI applications through software-as-a-service.

But Luckbox remains confident in our top stock prediction in December’s annual forecasting issue. We anticipated Palantir (PLTR) would continue its turnaround effort, and since then the company has turned a profit, accelerated its autonomous decision-making and increased its quarterly revenues by 18% year-over-year.

Palantir’s Edge AI succeeds in low-power

C3.ai : Cheaper AI Than You’d Think

C3.ai (AI) has soared on the hype surrounding any business related to AI.

But the enterprise AI software company traded down to irrational levels to end 2022 because of weak short-term results from a switch in the pricing model.

Even after the big rally, the stock trades at just 4.5x the expected value of 2024 sales targets.

Wise investors dumped C3.ai stock on the recent rally from under $10 to over $30 in just over a month. We remain bullish on the company, which is trading at a major discount because of the painful transition to a payas-you-go consumption model.

The good news is C3.ai is a “pick and shovel” software developer of the generative AI chat competition ongoing with and low-bandwidth conditions that occur with drones, turbines and manufacturing systems. At press time, shares in Palantir had increased 55% this year, and analysts continue to raise estimates. Raymond James set a 12-month target of $15 per share. With increased liquidity and greater adoption of higher-risk assets, Palantir could soar past that target in the year ahead.

For insight into the emerging battle between Google and Microsoft AI stocks to watch, Luckbox sought the wisdom of Seeking Alpha’s highly regarded analysts. Their comments appear on these two pages.

—Garrett Baldwin

Google and the OpenAI partnership with Microsoft. C3.ai gets to license the best features of the AI chat technology from both tech giants while hopefully avoiding the errors inherent in both products.

C3.ai is far cheaper than the market thinks because of the irrational value when the stock dipped to only $10. C3.ai tripled in a couple of months, but the valuation remains very appealing at around $20.

Investors looking to own the AI stock may consider a starter position in the $20s and look to acquire more shares on any return to the previous trading range starting at $15. After all, C3.ai isn’t likely to report growth in the next couple of quarters, likely leading to dissatisfaction among investors holding the stock in the near term.

—Excerpted from a Stone Fox Capital contribution to a Seeking Alpha newsletter. Reprinted with permission from Seeking Alpha.