Should You Think About Buying C3.ai, Inc. (NYSE:AI) Now?

C3.ai, Inc. (NYSE:AI), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$31.62 and falling to the lows of US$23.40. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether C3.ai's current trading price of US$24.60 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at C3.ai’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for C3.ai

What's The Opportunity In C3.ai?

The stock is currently trading at US$24.60 on the share market, which means it is overvalued by 27% compared to our intrinsic value of $19.33. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that C3.ai’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from C3.ai?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 5.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for C3.ai, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in AI’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe AI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on AI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing C3.ai at this point in time. While conducting our analysis, we found that C3.ai has 2 warning signs and it would be unwise to ignore these.

If you are no longer interested in C3.ai, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.