For all the clamor in the AI space, most investors have largely focused on large companies. On the surface level, that makes sense.
Big-name tech firms have billions of dollars that they can easily throw into AI projects. If there’s even a small boost to the company’s bottom line, it can mean big bucks for shareholders. But smaller AI plays look attractive now too. That’s because these companies have a smaller market cap.
As smaller companies grow, they can see a massive percentage return. And that move likely isn’t priced in yet.
For instance, pure-play AI application firm C3.ai (AI) is growing with the AI trend. While analysts expected revenues to rise by just 5%, instead they jumped by 20%.
While shares jumped 20% on the news, they’re still slightly down over the past year. As a smaller company with a market cap around $3 billion, C3.ai also isn’t profitable yet.
Action to take: Speculative investors may like shares here or on any big one-day drops. The company continues to perform well for an early-stage AI play. And if they have a breakthrough, the overall company could be worth significantly more.
For traders, the September $35 calls, last trading for about $2.20, could see mid-double-digit returns if shares carry through their current uptrend and rise higher.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.