Artificial Intelligence (AI), the Wall Street buzzword, plays an important role in business operations to automate tasks, including consumer service work, fraud detection, and quality control. The rising adoption of artificial intelligence for various commercial and personal purposes is driving the expansion of artificial intelligence in the market.
The U.S. AI is expected to grow at a CAGR of 19.3% from 2024 to 2034. Moreover, with the rapidly evolving landscape of technology, AI’s significance is poised to expand exponentially. Additionally, by 2025, AI might eliminate 85 million jobs but create 97 million new ones, resulting in a net gain of 12 million jobs.
Against this backdrop, let’s compare two AI stocks, C3.ai, Inc. (AI) and UiPath Inc. (PATH), to determine which is a better AI stock to own.
The Case for C3.ai, Inc. Stock
With a $3.08 billion market cap, C3.ai, Inc. (AI) operates as an enterprise artificial intelligence (AI) software company in North America, Europe, the Middle East, Africa, the Asia Pacific, and internationally.
AI’s stock has plunged 16.3% over the past three months to close the last trading session at $24.23.
AI’s forward Price/Sales of 8.04x is 172.3% higher than the industry average of 2.95x. In terms of forward EV/Sales, it is trading at 6.06x, 109.8% higher than the industry average of 2.89x.
In the fiscal first quarter that ended July 31, 2024, AI’s total revenue stood at $87.21 million. Moreover, its net loss was $62.83 million, and non-GAAP net income per common share was $0.50.
Analysts expect AI’s revenue for the second quarter (ending October 2024) to increase 24.3% year-over-year to $91.02 million. However, the company’s loss per share for the same quarter is expected to grow 24.5% year-over-year to $0.16.
AI’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a D grade for Value, Sentiment, and Quality. Within the Software - SAAS industry, AI is ranked last out of 18 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see AI’s ratings for Growth, Momentum, and Stability here.
The Case for UiPath Inc. Stock
Valued at $7 billion by market cap, UiPath Inc. (PATH) provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions, primarily in the United States, Romania, the United Kingdom, the Netherlands, and internationally. The company offers a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization.
PATH’s stock has gained marginally over the past three months to close the last trading session at $12.70.
PATH’s forward non-GAAP PEG of 0.98x is 48.9% lower than the 1.92x industry average. Also, the stock’s forward Price/Book ratio of 3.74x is 14.2% lower than the industry average of 4.36x.
For the first quarter that ended July 31, 2024, PATH’s total revenue increased 47.9% year-over-year to $316.25 million. Its gross profit grew 456.2% year-over-year to $252.93 million. Its non-GAAP net income came in at $23.76 million.
Street expects PATH’s revenue for the third quarter ending October 2024 to increase 6.7% year-over-year to $347.64 million. Its EPS is expected to be $0.07. Moreover, the company has surpassed revenue and EPS estimates in each of the trailing four quarters.
PATH’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PATH has a B grade for Quality and Growth. It is ranked #7 in the same industry.
Click here for the additional POWR Ratings for PATH (Value, Stability, Sentiment, and Momentum).
C3.ai (AI) vs. UiPath (PATH): Which AI Stock Is Set to Impress This Earnings Season?
Technological innovations have always been an important part of the majority of industries. The rapid penetration of digital technologies and the internet has significantly contributed to the growth of artificial intelligence.
Leading AI companies, such as C3.ai and PATH, stand to capitalize on bright industry growth prospects. However, PATH’s lower valuation and promising near-term outlook favor it as the better AI stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Software - SAAS industry here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
PATH shares were trading at $12.45 per share on Tuesday afternoon, down $0.35 (-2.73%). Year-to-date, PATH has declined -49.88%, versus a 20.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
C3.ai (AI) vs. UiPath (PATH): Which AI Stock Is Set to Impress This Earnings Season? StockNews.com
