Have you noticed something changing in the AI trade?
Last night’s earnings results from Broadcom (AVGO) were a sign. The night before, Oracle (ORCL)’s earnings were another.
I’m talking about the shift from AI architecture to AI monetization.
A local contractor built a luxury apartment building on one of Cincinnati’s seven hills. The building is perfect, but the real magic hasn’t happened yet. People haven’t started using it.
In under a month, it will start buzzing with new tenants. New businesses are rushing to finish their shops and bars because they know traffic means money. That’s the monetization. That’s what’s starting to happen outside the AI architecture that NVIDIA (NVDA) and others built.
This is where more companies and investors make a lot of money.
Today’s Fast Profits trade idea focuses on one of the companies that will be part of the next chapter. C3.AI (AI) is one of many I’m adding to my portfolio over the next few months.
Let’s dig in.
Fundamentals: BULLISH
C3.AI had an early coming-out party. The stock’s ticker symbol is “AI,” so it was bound to generate attention. It reminded me of the dot-com bubble when everyone changed their names to XYZ.COM to ride the wave. But things are different here.
C3.AI is a tech service company. They provide platforms to harness the “internet of things,” SaaS, and AI to make businesses and governments run and forecast more efficiently. They get revenue from subscriptions and services. They remind me of another AI service company, IBM (IBM).
Revenue is moving higher now. Last quarter, C3.AI posted better-than-expected revenue and earnings per share. Year-over-year revenue growth is at 19% and trending higher. Management increased their guidance for 2024 and 2025.
Sentiment: BULLISH
C3.AI had an early coming-out party with investors. The stock’s IPO price shot from $42.00 on December 9, 2020, to $92 by the close the same day. By the end of 2020, C3.AI had traded to highs of $183.90, only to collapse to its lows of $10.16 in December of 2022.
Analyst ratings dropped to “sells” while institutions backed away. The stock bounced from $10, a psychologically significant price level. Fundamental and technical pictures have changed, but
investor sentiment remains pessimistic.
Only 27% of analysts rank C3.AI a “buy.” Forty percent rank it a hold, and 33% put it in the “sell” column. That lack of buy recommendations suggests fundamental improvements could be met with upgrades.
Recent short interest data shows that almost 30% of C3.AI shares float is tied up in short sale trades. Anything over 5-10% is high, putting the stock on the “Short Squeeze Candidates” list. A short squeeze can break the stock through key price levels.
From a sentiment perspective, C3.AI shares display a healthy level of pessimism. The stock is beginning to climb its own “Wall of Worry.”
Technicals: BULLISH
C3.AI shares bounced from a psychologically significant price in April. The stock posted lows around $20. Momentum slowly started to turn positive. The stock spent two weeks battling with its 50-day moving average in May, completing a bullish cross above that key trendline on May 30.
The bullish move was magnified by the stock breaking above its 200-day moving average on the same day. This surge was in response to the company’s better-than-expected earnings report on May 29.
Ahead of that earnings report, the stock’s shorter-term 20-day moving average crossed above its 50-day, creating a “Silver Cross.” This pattern usually indicates a positive 4–6-week trend.
From a short-term perspective, C3.AI shares have become overbought after a 40% rally. Patience may pay off in getting a lower price on the stock. I expect to see C3.AI shares consolidate around $30 and maybe dip to $29 if general market selling begins.
Looking forward, the stock is preparing for another bullish pattern. C3.AI stock’s 50-day moving average is heading for a cross above its longer 200-day moving average, forming a “Golden Cross.” This pattern signals long-term bullish momentum.
C3.AI stock just moved back into a long-term bull market trend after a month of consolidation. The stock is trending above its long-term 20-month moving average, suggesting a long-term bullish trend.
Bottom Line
From a short-term perspective, I expect C3.AI shares to consolidate around $30 and maybe dip to $29. These are the prices I consider buying the stock. Over the next 4-6 weeks, I expect a rally towards $33, potentially triggering a short covering rally.
A positive earnings report on August 28 should propel the stock towards my year-end target price of $40. My long-term target price for the shares is $50, but I will reassess after the August 28 earnings report.
How to Trade This
I’ve already mentioned my target buy price of $29-$30. Investors interested in leveraging the expected move should consider long-term LEAPs options on C3.AI. Currently, the January 16, 2026, C3.AI $30 call options are trading with an asking price of $10.00. This is the option I will add to my portfolio.
A move to my target price of $40 will result in a theoretical value of $15.52, a 55% return with a year left on the option. A price of $50 by year-end provides a theoretical value of $23.98, a return of 138%, again with a year left on the option.
Given the market and AI stock volatility, I use $30 as my exit price for either of these positions.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.