While a share of stock is a fraction of a company, its valuation can vary wildly. Intense fear or greed can lead to big swings in valuation, often quickly. Over time, however, growing earnings and revenue tend to be a reliable indicator of a company’s performance.
But if you combine a company with improving operational results that’s also seeing interest in its shares exploding higher, you may be on track to profit from a big trend.
That’s how investors feel about C3.ai (AI). The artificial intelligence software provider has been a big winner this year, more than doubling. And the stock’s recent pullback was averted by better-than-expected earnings.
As one of the pure-plays on the growth of AI, to say nothing of the company’s hot product, ChatGPT, it’s likely that the company will be valued far more than tits current market cap of about $2.3 billion as it continues to grow.
Action to take: Shares are volatile, so interested long-term investors should look to buy on down days, and be willing to take short-term profits after a big run higher.
And even with some moves toward the $30 range, C3.ai shares have been pulling back for now, so investors can be patient about investing in a long-term trend getting a lot of short-term media attention right now.
For traders, the July $40 calls, last going for about $2.80, can likely be bought substantially cheaper on a down day for shares, then flipped in the coming weeks on the stock’s next move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.