For the Next Round of AI Winners, Look for Smaller Companies Benefiting Now

AI stocks have been soaring over the past year and change. Most of the focus has been on big-cap tech companies. They have the big bucks to invest heavily in these technologies right away.

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  • But there are other ways to play the trend. While not every AI stock will be a winner going forward, companies seeing real returns already may continue to benefit, and reward shareholders moving forward.

    One potential winner here is developer C3.AI (AI). The software company posted better-than-expected results in its latest quarter. Subscription revenue even rose by 23 percent.

    While not yet profitable, rising revenues allowed C3.AI to narrow its losses significantly.

    C3.AI jumped higher on the earnings report, but has still been a laggard in the AI space. Shares are up about 40 percent over the past year. Plus, the company remains debt-free, and has nearly $6 per share in cash, providing a large margin of safety.

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  • Action to take: C3.AI likely has more upside ahead, especially if it can continue with the positive momentum it’s starting to see now.

    Shares are a buy here as a speculative trade based on improving momentum higher.

    For traders, the May $40 calls, last trading for about $3.30, could see high-double-digit returns or better in the coming months depending how strongly shares rally from here.


    Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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