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Thomas Siebel, CEO of C3.ai.
Chris J. Ratcliffe/Bloomberg
To really get a sense of the market’s excitement and concerns about the future of artificial intelligence, look no further than
C3.ai
,
which has the AI ticker.
The stock has been a rocket ship this year, ending 2022 at just over $11, and 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 a 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 covers.
Then on Wednesday, the stock naturally gave up some of those gains, then slid another 13% on Thursday, the day after the company released its April quarter financial results. For the week, the stock is pretty much stable.
Actual results for the April quarter offered few surprises – the company had announced in advance in mid-May. C3.ai’s full-year forecast fell short of Street’s estimates, and secondary market action on Wednesday was down 20%. But is CEO Tom Siebel worried? Definitely not.
“I declare victory here,” Siebel said in a Thursday morning interview with Barrons.
“Our business is good,” he said. “Everyone has reset expectations. The stock had no business being where it was. The share price has been reduced to a reasonable level. We are now in position to beat and raise, beat and raise and beat and raise.
The main problem with the earnings report is that the outlook for fiscal 2024 calls for revenue growth of around 15% in the middle of the range – and investors seem to think the company should grow faster than that. Siebel says not to worry.
“Are we growing faster than that over time? Absolutely,” he says.
Another big thing for the AI industry is whether Washington is making a big push to regulate AI software. Some executives have said it would be helpful for the industry to get clear regulations — OpenAI CEO Sam Altman said this during a congressional hearing. But Siebel says such an approach is only “tugging” with Congress.
Siebel argues that trying to regulate AI models is tantamount to “criminalize or shut down science”. But Siebel is not opposed to narrow legislation that would focus on specific types of AI abuse, dealing with the use of personal data. There could be a specific law against the “propagation of cultural bias”, for example, or for publishing an algorithm that interferes with elections, he says.
As for the competition, Siebel says most large commercial companies working on generative AI produce models that aren’t really applicable to commercial applications, given frequent errors and other issues. C3.ai’s approach, on the other hand, is to use large open source language models – they use a model of
Alphabet
It is
Google and combine it with internal data pulled from commonly used enterprise applications that contain customer, financial performance, and product data.
Siebel also addressed the question of whether we see a bubble in the AI space. The CEO pointed out that almost every major technological innovation brought about a bubble period, not just at the dawn of the internet age, but also things like the development of continental railroads in the 19th century.
“Stocks can be temporarily overvalued,” he says. “There are a lot of jostling. But we’re in the first half of the first inning and the first guy at bat.
Write to Eric J. Savitz at eric.savitz@barrons.com