Veritone vs. C3.AI: Artificial intelligence (AI) is a rapidly evolving field of investigation that has significantly impacted how we live and work today.
Indeed, the technology is not just used to automate tasks and procedures that were once only accomplished through manual labor; it’s also enabling better decision-making in domains such as data analysis and customer service.
Moreover, AI can help streamline computationally-intensive endeavors, including facial recognition, climate modeling, and medical diagnosis.
Interestingly, large-scale enterprises like Amazon have been running artificial intelligence applications in the background for years. The online marketplace deploys several machine-learning algorithms to optimize logistics, improve product selection, and detect fraudulent activity.
Because of the immense potential of AI, it’s no surprise that a vast array of companies have sprung up to exploit the commercial possibilities associated with it. But there are only so many publicly-listed pure play outfits in the space, making it difficult to get exposure to this most captivating of sectors.
However, there are a few. And it’s two of these, Veritone and C3.AI, that we’ll look at here, examining why they might make for a good investment – and, ultimately, what sets them apart.
No doubt spurred on by the fevered reaction to the release of OpenAI’s ChatGPT recently, shares in C3.AI have exploded this year, rising almost 150% at one point since the beginning of 2023.
While that kind of price action might seem impressive, it’s worth noting that the company is still a whopping 87% down from its post-IPO highs of $177. That said, it appears the worm has finally turned for C3’s fortunes, with everything AI-related now suddenly in vogue.
Describing itself as a comprehensive enterprise AI development platform, C3 really shines in its ability to quickly and easily deploy out-of-the-box solutions that deliver real-world results.
For instance, the company’s more than 40 turnkey applications allow organizations to quickly and easily build and manage AI systems that are tailored to their specific needs and requirements. This makes it easier to get started with AI, helping to quickly realize the benefits of this exciting technology.
Indeed, the firm has thus far managed to snag some pretty impressive clients. Oil and gas giant Shell is using its technology to scale up its predictive maintenance program, while no less an institution than the United States Air Force is implementing C3’s AI Readiness software to proactively increase mission capability.
However, from an investment point of view, the company’s efforts to establish a consumption-based pricing model should excite shareholders the most.
Tom Siebel, C3’s CEO, claims that the transition from a subscription-based framework “will be a substantial contributor to growth in forthcoming quarters.” At the same time, its focus on building a global sales organization populated with highly proficient subject matter experts will affect top-line expansion in the medium to long term.
Unfortunately, C3.AI isn’t a profitable venture just yet. The business registered a net loss per share of $0.63 in the second quarter, compared to a net loss per share of just $0.55 for the equivalent period a year ago. That said, management believes it will see positive earnings by the end of fiscal 2024, buoyed perhaps by its non-GAAP gross margin of 77%.
Unusually for a company that could be considered something of a meme stock, short interest in C3.AI is uncommonly low. In fact, at 9%, it seems the market is not anticipating an imminent collapse in sentiment surrounding the business just yet. That could mean the best time to buy is now, with meaningful upside still available even at these locally inflated prices.
Veritone is another leading provider of AI technology for enterprises, this time with a niche in the dynamic management of digital assets.
Indeed, the company’s proprietary operating system, aiWARE, is an expansive ecosystem of machine-learning models that can transform audio, video, and other data sources into actionable intelligence.
Moreover, the business offers a variety of services to help organizations leverage AI technology and drive revenue opportunities. For instance, Veritone’s VeriAds Network is an artificial intelligence-powered advertising platform that allows advertisers to deliver personalized, contextually-relevant ads to their target audience.
The platform uses AI and machine learning technologies to analyze large amounts of real-time data, such as demographic information, viewing behavior, and content consumption, to better understand and target the right audience.
As such, once the target audience has been identified, VeriAds Network allows advertisers to create and deliver optimized ads for the specific viewing context. This includes device type, time of day, location, and even the viewer’s mood, as determined by the tone and sentiment of the content being consumed.
The upshot of all this – as with much of what Veritone offers – is that users, such as social media personalities, bloggers, and podcasters, are in a position to generate the extra ad revenue that would have been unattainable without VERI’s AI insights.
Given the utility of the firm’s products, it’s natural that Veritone should witness a renaissance in its finances. Consequently, VERI recorded both a revenue and earnings beat in the third quarter of 2022, growing sales 64% to $37.2 million while exceeding Wall Street estimates by $0.02 on profits, with a non-GAAP loss of $0.16 per share.
Additionally, the company posted record new bookings of $16.5 million, up 393% year-on-year. On top of that, software customers increased by 43%, while software products & services grew even more at 131%.
VERI vs AI Stock: Which Is The Better Stock?
As two companies currently in the early stages of growth, investors shouldn’t expect to see much in the way of profits for Veritone and C3.AI just yet.
However, based on each firm’s respective forward price-to-sales multiple, VERI’s 2.02x ratio trumps C3’s somewhat inflated 9.70x, making the former a better choice from a valuation perspective.
In fact, taking into account the long time horizon that C3.AI expects to endure before seeing meaningful bottom-line improvement, Veritone’s business seems the most appealing at the moment.
Indeed, with its aiWARE platform ready to capitalize on a $100 billion opportunity in the unstructured data space, VERI is likely to be a good stock pick well into the future.
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