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This Leading AI Stock is on the Verge of Breaking Out

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C3.ai (AI - Free Report)  is one of the most interesting technology companies in the market today.

C3.ai is an enterprise software company that has built and deployed a portfolio of industry specific AI enabled SAAS products that empower organizations to take advantage of the new technology. Customers include Baker Hughes (BKR - Free Report) , Koch Industries, Bank of America (BAC - Free Report) , Consolidated Edison (ED - Free Report) , the US Air Force, and a number of other heavy hitters.

AI stock has been a huge beneficiary from the developments highlighting the artificial intellegence industry, and the the stock has rallied tremendously as a result. C3.ai stock is up 270% YTD, and looks like it may be on the precipice of another breakout.

Although some investors may think a stock rallies so much in a short time is a reason to avoid it, momentum traders know better. Relative leaders often continue to be leaders because of this momentum, although traders must still be keen readers of price actions and managers of risk.

C3.ai stock has an extremely compelling technical setup investors should keep an eye on. I shuold note that AI currently has a Zacks Rank #3 (Hold) rating. This indicates that the earnings revision trend is mixed, however an upgrade could be exactly the catalyst that sends the stock higher.

Zacks Investment Research
Image Source: Zacks Investment Research

Early Mover in the AI Space

C3.ai isn’t just hopping on a hot trend either. The company has been utilizing AI technology since before the recent hype and has been building its products to help its customers reach their goals for years now.

AI has developed dozens of different software applications used throughout industries. They range from supply chain production schedule management to property appraisals, and energy management. By collaborating with companies, and organizing their data, these SAAS products provide insights that may previously go unnoticed.

More than anything, A I has built tools that enable analysts, investigators, and executives to be better at their jobs.

Additionally, the company founders comes from top pedigree. Tom Siebel is a Silicon Valley veteran who was formerly the founder and CEO of Siebel systems. Founded in 1993, Siebel Systems became a leader in enterprise software with more than 8,000 employees and annual revenue of more than $2 billion.

Technical Perspective

Momentum trading setups are built off of large consolidations in price. In the price chart of AI below we can see that it has formed, and broken out of these patterns already this year. This is typical of momentum stocks as they often carve out multiple opportunities for traders.

Over the last two months, AI stock has formed another convincing base from which investors can measure a trade. If the price can break out above the $42.50 level, it will likely initiate a slew of new buying and send the stock to another yearly high. Alternatively, if the price is unable to hold above the $37.50 level, investors should wait for another opportunity as the setup will be invalidated.

TradingView
Image Source: TradingView

Sector Strength

While many market participants have been watching the large cap technology stocks like Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report)  and Meta Platforms (META - Free Report)  release their newest Artificial Intelligence products, some of the smaller AI companies offer even better opportunities.

Palantir (PLTR - Free Report) , the brainchild of famed Silicon Valley entrepreneur and investor Peter Theil, is another exciting company using new technology in novel ways.

Palantir is a software company specializing in data analysis and artificial intelligence. Palantir's software platforms, such as Gotham and Foundry, empower organizations to integrate, analyze, and visualize vast amounts of data, enabling them to make more informed decisions and solve intricate problems. The company serves a diverse range of sectors, including government agencies, defense, finance, healthcare, and more.

Although there is no clean trade setup on Palantir’s stock chart, it does boast a Zacks Rank #2 (Buy), demonstrating upward trending earnings revisions. Additionally, the stock just broke out to new yearly highs showing huge demand for these types of AI stocks. I wouldn’t be surprised if the strength in PLTR stock spilled over into C3.ai.

TradingView
Image Source: TradingView

Bottom Line

AI technology may be the next biggest innovation since the internet, so investors must stay up to date with the ongoing developments. There are several ways to get exposure to the industry, however C3.ai may be one of the best pure plays in the market. However, because of its Zacks Rank, investors may want to wait for the earnings estimate upgrade before committing to the stock. 

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