Wall Street has been trying to find its way through difficult times in recent months, which has led to fits and starts for major stock market indexes. Monday started the week with mixed moves, as strength in tech stocks faced weakness in some other sectors of the market.
Artificial intelligence has been in the spotlight throughout 2023, and recent innovations have made AI more important than ever in just about every industry. That's why it's noteworthy that two AI stocks were among the big winners in the stock market on Monday. Here, we'll look more closely at what lifted shares of C3.ai (AI -4.26%) and Upstart Holdings (UPST -5.62%) and whether those gains can continue.
C3.ai sees better times ahead
C3.ai shares jumped nearly 20% just before 1 p.m. ET. The software company specializing in enterprise AI reported preliminary results for the fiscal fourth quarter ended April 30, and investors liked what they saw.
The numbers from C3.ai were encouraging. Revenue for the quarter came in between $72.1 million and $72.4 million, and that was above the $70 million to $72 million the company had projected in its previous guidance. Similarly, adjusted operating losses were narrower than expected, falling in a range of $23.7 million to $23.9 million. C3.ai managed to post positive free cash flow, even allowing for new expenditures for its AI headquarters.
Moreover, shareholders liked hearing C3.ai's assessment of the business environment for enterprise AI. As the company sees it, help in applying AI-powered predictive analytics to business processes is in high demand, and C3.ai's consumption-based business model thrives when activity levels increase.
The software specialist has already seen a big rise in qualified new prospects in its sales pipeline. C3.ai's partner ecosystem is also doing its part to bring in new business.
C3.ai is still hopeful it can post an adjusted profit by the end of fiscal 2024, and CEO Tom Siebel expects an exciting year ahead. With AI getting so much attention, C3.ai has its chance to prove its naysayers wrong and keep taking advantage of favorable trends in software.
Upstart gets more funding
Also jumping were shares of Upstart Holdings, which climbed 18% early Monday afternoon. The provider of AI-powered credit scoring services made another announcement supporting the appeal of its business model after seeing its stock fall sharply over the past year and a half.
Upstart reported that global alternative investment manager Castlelake had made an agreement with the AI-based lending marketplace company to purchase up to $4 billion in consumer installment loans. The investment will include not only some of the loans that Upstart has already originated on its platform, but also some of Upstart's future loan flow looking ahead.
Castlelake said that the move was part of its broader participation in the consumer credit and specialty finance sector, where it sees opportunities that more traditional funding hasn't taken advantage of to date. As interest rates rise and bank financing becomes scarcer, Castlelake sees private capital playing an increasingly important role in helping businesses grow.
For Upstart, the vote of confidence is valuable because shareholders have been nervous about the AI-powered company keeping loans on its own balance sheet. By having multiple channels to move those loans onto the books of outside lenders that are comfortable taking them on, Upstart can concentrate on making its algorithms as accurate and profitable as possible -- and hopefully drive continued interest in its credit scoring technology.
