Is C3.ai Stock a Buy Now?
Nasdaq Shares of C3.ai (NYSE: AI) have set the market on fire in 2023, with outstanding gains of about 180% as of this writing. But the pure-play artificial intelligence (AI) enterprise software company has lost steam of late.
The stock has slipped in the past month, which seems surprising as there has been no company-specific news that should have led to the drop. Of course, there has been chatter on Wall Street comparing the eye-popping surge in AI stocks to a bubble about to pop, and so this may have negatively impacted the stock.
But C3.ai stock is now available at a relatively cheap valuation. Should investors consider taking advantage of its pullback and buy this AI stock? Let's find out.
Cheaper than before, but is it cheap enough?
C3.ai currently trades at a price-to-sales ratio of 13. That's well below its sales multiple of over 16 a month ago.
AI PS Ratio data by YCharts
However, it is worth noting that C3.ai was trading at just 4.4 times sales at the end of 2022. The stock's massive surge in 2023 explains why it is trading at such a rich valuation despite a significant pullback in the past month. Also, C3.ai's hot rally this year is driven more by the hype in AI applications rather than its own financial performance. This is evident from the following chart.