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Thomas Siebel, chief executive officer of C3.ai.
Chris J. Ratcliffe/Bloomberg
To really get a sense of the market’s enthusiasm—and concerns—about the future of artificial intelligence, look no further than
C3.ai
,
which has the ticker AI.
The stock has been a rocket ship this year, ending 2022 a little over $11, and just this week trading as high as $44. Even after giving up some recent gains on Thursday morning, the stock has more than tripled so far this year.
But, oh, the volatility. On Tuesday, C3.ai soared 33% on some combination of AI stock mania, an announcement that the company’s software will be sold on a marketplace run by
Amazon
(AMZN) Web Services, and some short covering.
Then Wednesday, the stock understandably gave up some of those gains, and then slid13% more on Thursday, the day after the company reported financial results for the April quarter. For the week, the stock is about flat.
The April quarter’s actual results offered few surprises—the company had pre-announced in mid-May. C3.ai’s full-year guidance came in short of Street estimates, and the stock in aftermarket trading Wednesday was down as much as 20%. But is CEO Tom Siebel worried? Definitely not.
“I’m declaring victory here,” Siebel said in a Thursday morning interview with Barron’s.
“Our business is good,” he said. “Everyone reset expectations. The stock had no business being where it was. The stock price has been reset to a reasonable level. We’re now in position to beat-and-raise, beat-and-raise and beat-and-raise.”
The key issue with the earnings report is the outlook for the 2024 fiscal year calls for revenue growth of about 15% at the middle of the range—and investors seem to think the company should be growing faster than that. Siebel says not to worry.
“Do we show faster growth than that over time? Absolutely,” he says.
Another important for the AI sector is whether Washington makes a big push to regulate artificial intelligence software. Some leaders have said it would be helpful for the industry to get some clear regulation—OpenAI CEO Sam Altman said so at a Congressional hearing. But Siebel says such an approach is just “playing rope-a-dope” with Congress.
Siebel contends that trying to regulate AI models is the equivalent of “criminalizing or stopping science.” But Siebel isn’t opposed to narrow legislation that would focus on specific kinds of abuse of AI, addressing the use of personal data. There could be a specific law against “propagating culture bias,” for instance, or for publishing an algorithm that interferes with elections, he says.
On the topic of competition, Siebel says most large commercial companies working on generative AI are producing models that aren’t really applicable to commercial applications—given frequent errors and other issues. C3.ai’s approach, meanwhile, is to use open source large language models—they use a model from
Alphabet
’s
Google unit—and combine that with internal data pulled from commonly used corporate apps which hold data about customers, financial performance, and products.
Siebel also addressed the question of whether we’re seeing a bubble in the AI space. The CEO pointed out that almost every major technological innovation has resulted in a bubble period—not just the dawn of the internet era, but also things like the development of the continental railroads in the 19th century.
“Stocks can get temporarily overvalued,” he says. “There is a lot of thrashing around. But we are in the first half of the first inning—and the first guy at bat.”
Write to Eric J. Savitz at eric.savitz@barrons.com
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