C3.ai joins the AI bonanza

Hey Superheroes,

The S&P 500 and Nasdaq both closed at all-time highs overnight and the ASX followed with a new high today. How exciting! 

While Wall Street continues to see companies release quarterly earnings, the ASX might’ve just taken the centre stage after over 50 companies released half-year earnings this week. 

Here are this week’s stories.

C3.ai joins the AI bonanza with strong price performance

Shares of C3.ai (NYSE:AI) are up more than 40% in the last week after posting better than expected quarterly results. 

C3.ai was the ninth most traded U.S. stock on Superhero last year despite only listing in 2020.

🤖 The low-down on the data

C3.ai’s latest numbers show that it’s doing much better than what analysts had expected. 

The AI software company beat revenue estimates and even posted a net loss less than half of what was expected. Revenues grew over 17% year-on-year while net loss only increased by 1.35%. While this may not beat profitability, its recent stock performance suggests the market thinks it’s a step in the right direction. 

Here are the numbers:

• Revenue: $78.4m actual vs $76.1m expected
• EPS: $0.13 loss vs $0.28 loss expected

C3.ai generates ~90% of its revenue from subscriptions, which also performed better than expected. Subscription growth is viewed positively given that it generally signals longer-term customer relationships.

Investors fly to buy Coles

Coles gained over 8% this week after releasing its earnings report showing a profitable first half – a stark contrast to how investors reacted to Woolies’ report last week. 

🛒 Fix and nix 

While its biggest rival notched a net loss last half, Coles recorded an interim net profit of $594m, allowing it to reward investors with a $0.36/share fully franked dividend payout. Coles also saw sales increase 4.90% YoY in the first eight weeks of this year, a lot higher compared to the 1.50% seen by Woolies.

Analysts believe that Coles has tackled previous theft issues by improving staff training and technology. They note that this effort could greatly benefit Coles in the latter half of FY 2024.

👀 Under a watchful eye

The Aussie grocery industry is currently under investigation by the ACCC after allegations of price gouging. 

Coles CEO Leah Weckert addressed this in the earnings announcement by stating that Coles’ profit margin has not changed in the last five years at approximately $2.60 per $100 of sales. 

🔦  Some other things we’re shining the Spotlight on:

• NOT SO RED HOT ANYMORE: Latest AU monthly inflation data released on Wednesday showed that inflation in January remained the same as December’s at 3.40%. This is expected to be taken into consideration in the next RBA cash rate decision on March 19.
• THE WAIT IS OVER: Alcoa (NYSE: AA) has offered to fully acquire Alumina (ASX: AWC) after two decades of speculation. Under the proposal, shareholders would receive 0.02854 shares of Alcoa per share of Alumina. This values Alumina at A$1.16/share – 9% more than its last close – when calculated using Alcoa’s last closing price. 
• XERO’S NEW HERO: Xero is set to release a new AI companion called JAX (short for “Just Ask Xero”) before the end of the year. JAX is part of Xero’s latest strategic update which aims to double the size of its business and increase its average revenue per user (ARPU).

While the ASX has pretty much wrapped up its half-year earnings season, Wall Street continues on with Target, Gitlab and Broadcom among those reporting next week.

Keep up to date with market news and insights by following us on Instagram, @superheroau!

That’s all for this week’s Spotlight!