C3.ai, Inc. (AI)

The Nasdaq was up 361 points, or 2.9%, to 12854 today, bringing an end to the bear market (a decline of 20% from a recent high). The Nasdaq is now up 20% or more from a recent low, meaning a new bull market is now underway for tech stocks.

C3 will be reporting its May-June-July quarter in about 3 weeks. Based on public comments made by Tom Siebel, I expect results to come in well above the guidance that was given in the last earnings call. The market is in an uptrend, and C3 is poised to move significantly higher once they report their quarter. Economic growth has been weak, slightly negative in the two most recent quarters, and investors are going to be looking for companies like C3 that can grow even when economic growth is weak.

The Pentagon’s Defense Contract Management Agency is out with a report on the F-35 fighter jet that says that there are too many defects in production of the plane. These defects are “an issue to the user community and a major concern negatively impacting the F-35 fleet”.

This is a very complex weapons system and I think there are plenty of opportunities for C3 to come in and make improvements with its artificial intelligence technology. As discussed at the Baird investment conference a couple of months ago, average availability of planes for the US Air Force has been about 50%. Using C3 technology they have been able to raise that by 10, 20, 30%.

Various media outlets are reporting today that Palantir is in the process of hiring a lot more people. This has some negative implications for C3 since the two companies both compete for defense business, and Palantir may be getting more of the business. However, overall, I think this is a positive indication for C3. C3 and Palantir are both hiring a lot of people and this is an indication of strength in demand for their products. If anything, it looks to me like C3 is ramping up its sales in the defense space pretty rapidly. Last December, C3 announced that former National Security Advisor H.R. McMaster was joining the C3 Advisory Board. In June C3 announced that retired U.S. Air Force General John E. Hyten had been added to its advisory board. General Hyten recently retired after serving as the 11th Vice Chairman of the Joint Chiefs of Staff (the nation's second highest ranking military officer) from 2019 to 2021. And in April C3 announced that Major General Martin F. Klein, USAR (TPU) had joined its executive team to oversee the company’s defense and intelligence operations. General Klein most recently served as the Chief Operating Officer of the Department of Defense’s Joint Artificial Intelligence Center (JAIC). So with the people C3 now has on board they should be ramping up sales in the defense space pretty rapidly.