Are you looking for AI stocks to buy during the stock market's recent pullback? Wall Street says beaten-down companies may yield good returns if you're ready to take a risk. According to analyst price forecasts, C3.ai (NYSE: AI) and Bigbear.ai (NYSE: BBAI) could make 40% or more soon. Here's a closer look at these equities and their rally requirements.
1. C3.ai C3.ai shares have fallen 25% in 2024. In 2023, AI euphoria drove the stock up 157%. C3.ai hasn't been growing like investors expected from an AI stock. Nvidia has tripled its revenues, but C3.ai's revenue climbed 18% last quarter, ended Jan. 31. For the quarter, revenue was $78.4 million, up 7% over the prior quarter.
However, the company is optimistic. C3.ai helps businesses enhance throughput and efficiency with AI. The company reported a 71% increase in new pilots (29) over the previous year in its recent earnings announcement. It also closed 50 agreements, up 85% from last year.
If all those deals and pilots work, the stock may rise. According to Wall Street's consensus analyst price estimate of just under $30, C3.ai shares might climb 40%.
In order to rally investors, a substantially larger revenue growth rate is needed. After its disappointing earnings and persistent lack of profitability, C3.ai isn't a stock I'd buy today. While the potential sound attractive, investors may want to examine if the results match the anticipation.
2. BigBear.ai BigBear.ai shares climbed 218% in 2023, like C3.ai. BigBear.ai's stock has fallen 26% this year, reversing some of earlier gains. Analysts see a far greater upside. The consensus analyst price objective for BigBear.ai is $3, about quadruple its current price.
BigBear.ai targets AI prospects in supply chain management, national security, and digital identification. The company recently acquired vision AI leader Pangiam Intermediate Holdings to boost growth. Products and services can scan and identify people.
Lack of expansion is another BigBear.ai issue. Despite its promising possibilities, the findings haven't shown a near-term opportunity. BigBear.ai's sales was $40.6 million in the fourth quarter of 2023, unchanged from $40.4 million the year before. However, its net loss fell to $21.3 million from $29.9 million a year earlier.
BigBear.ai expects sales of $195 million to $215 million this year, up 32% at the midpoint when considering Pangiam results. If BigBear.ai can deliver growth and improve its bottom line, investors may be more optimistic about the stock. However, investors may want to wait until early May when the company announces earnings to gauge its success. This stock is dangerous due to its low profitability and growth.