Another day, another stock presentation.
This one comes from stock picker Enrique Abeyta, and he's calling his picks the "#1 AI Stock for 2023."
He claims this "little-known $22 stock" is the center of an industry growing faster than crypto, sports betting, and electric cars combined.
And you need to get in before March 31st.
The good news is he left enough clues in the presentation to figure out the stock, and I reveal it below.
Additionally, I'll give you some background information on the company so you can decide if it's a good investment.
Let's get started!
#1 AI Stock Of 2023 Summary
Creator: Enrique Abeyta
Newsletter: Empire Elite Growth
Stock: C3.ai (AI)
The company being teased by Enrique Abeyta in this presentation is C3.ai.
This company sells AI business tools to companies that help these companies make decisions and improve operations.
Its main product, the C3 AI Suite, combines data, analytics, and machine learning to get insights that help companies run better.
Shortly after going public, the stock reached over $160 before plummeting all the way down to around $10 (it currently sits at around $20).
This is definitely a high-risk, high-reward stock.
Revenue growth is slowing, they're burning a lot of cash, and they're paying 76% of their payroll in stocks, which can dilute existing shares.
On the plus side, they have a lot of cash to survive several years until they're profitable, and they're led by Tom Siebel, who has run successful companies before.
AI is hot, and this could cause the stock to take off if investors feel optimistic about the market as a whole.
And it is one of the few "pure play" AI stocks out there; most AI is being created by larger companies like Google, Microsoft, etc.
If you buy, expect a lot of volatility.
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Breaking Down The Presentation
I'm sure if you're here, you want to know everything about this presentation, including the name of the stock being pitched and information about the company.
Here's a bunch of FAQs you might have about "The #1 AI Stock for 2023."
1) What Is The Theme Of The Presentation?
I've covered a lot of different stock presentations in the past few years.
And they're all pretty much the same.
They start off with a flashy headline, and a stock picker makes a huge announcement about a "secret" stock.
In this case, Enrique Abeyta is claiming he knows a company that's a "potential 10-bagger in the coming years."
And that the industry this company operates in is one of the fastest growing, outpacing crypto, sports betting, and electric cars.
What's the industry?
Artificial intelligence, or AI for short,
Enrique claims this is going to be a $15 trillion industry, and he claims to have the best stock for AI.
In fact, the mystery company that Enrique is pitching is "at the center of it all."
and that a new product release on March 31st "could send its shares soaring."
2) What Are Some Clues About The Company?
These presentations are typically long-winded and can last over an hour.
First, the stock picker has to hype up their abilities, then get the reader interested in the industry, show some similar stocks that have gotten massive returns, etc.
Eventually, though, the stock picker starts dropping hints about the company they're teasing.
In this case, it happens about halfway through the pitch.
Enrique drops the following hints about the company:
- Contracts with Shell, Bank of America, Raytheon, Google, Microsoft, and the Department of Defense
- The CEO is a Silicon Valley veteran and owns 4.7 million shares of the stock.
- The CEO guided his last company to 5,697% gains.
- provides AI sensors to Shell
Additionally, Enrique mentions the following article from Forbes:
I was able to find this article, and it reveals the name of the company being pitched, which is C3.ai.
The CEO of this company is Tom Siebel, who is a Silicon Valley vet who founded Siebel Systems, which was bought by Oracle.
Here's another article detailing the relationship with C3.ai and Shell.
And finally, an article detailing C3.AI and Raytheon.
So I'm 100% sure the stock being pushed here is C3.AI.
What does this company do?
We'll answer that in the next section.
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3) What Does C3.ai Do?
C3.ai is an artificial intelligence company that creates AI tools for businesses.
Essentially, this company has products that combine big data, advanced analytics, and machine learning to extrapolate insights.
These insights are then used to create smarter business decisions.
The main platform, C3 AI Suite, is mainly used in the following sectors:
- Financial services
Apparently they're launching a new generative AI product on March 31st, which is what Enrique is alluding to when he keeps mentioning that date.
This new product "provides enterprise users with a transformative user experience using a natural language interface to rapidly locate, retrieve, and present all relevant data across the entire corpus of an enterprise’s information systems."
Additionally, it "integrates the latest AI capabilities from organizations such as Open AI, Google, and academia and the most advanced models, such as ChatGPT and GPT-3, into C3 AI’s enterprise AI products."
There are some positives to investing in this company.
We'll cover them in the next section.
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4) What Are Some Reasons For Investing In C3.ai?
There are definitely some compelling reasons for investing in this company.
Here are some that you should consider:
Pure-play AI stock
AI has really lit the world on fire this year when ChatGPT released their newest generative AI tool.
But despite AI being so popular, there are very few "pure play" AI companies.
Meaning there are very few companies that solely focus on this sector.
Instead, you see a lot of major companies like Google, Microsoft, Amazon, IBM, etc. at the forefront of this sector.
However, AI only makes up a small part of each of these companies.
If you wanted to just invest in an AI company, you'd have a hard time doing so.
C3.ai is one of the few companies that allows you to do that.
A lot of cash
Another thing to like about C3.ai is that they have nearly $790 million in liquid assets like cash and short-term investments.
If their current spending were to remain the same, they could fund their operation for three full years.
This gives them some breathing room as they pursue profitability.
People are high on AI right now.
Electric cars, crypto, renewable energies, the metaverse, and similar markets saw huge bumps when investors became optimistic about them.
That's where AI is right now.
People, including myself, have been blown away by AI's capabilities, and people are starting to see the AI revolution happening.
When people start searching for investments, they'll come across C3.ai.
But there are plenty of reasons to avoid this company as well.
Let's take a look at those reasons now.
5) What Are Reasons Not to Invest in C3.ai?
Despite the optimism about AI, there's still a lot of concern regarding C3.ai.
Here are the top ones:
You might be impressed by some of the names of the companies that C3.ai has contracts with.
Some include Raytheon, Baker Hughes, Shell, Google, Microsoft, and even contracts with the military.
However, they only have 236 customers, and 30% of their revenue comes from Baker Hughes.
And C3.ai's contract with Baker Hughes runs out in 2025.
This creates a concentration risk for C3.AI.
If Baker Hughes and a few other companies decide to go another way, you're looking at a loss of 50% of revenue.
Years From Profitability
While it's good that C3.ai has a lot of cash on hand, they're still years away from profitability.
It's always a gamble when a company is a few years away from profiting.
Companies like this one can run into setbacks that can push back their ability to make money.
Another issue for C3.ai is that they're moving to a usage-based revenue model.
This means there will no longer be a flat fee for companies using their services, but instead it will work like electricity.
The more you use, the more you pay.
This makes them much more vulnerable if the economy struggles.
If companies need to cut back, they'll just use the programs less, which means less money for C3.ai.
A flat fee at least guarantees income where usage doesn't.
A usage-based model is definitely better when the economy is strong and companies are willing to pay more for this kind of stuff.
I honestly couldn't tell you where the economy is headed in the next few years, but there's reason to be concerned.
Paying Employees in Stock
Another reason for concern is that C3.ai pays 76% of its payroll in stocks, which comes out to $204 million per year.
This can cause their existing shares to become diluted.
Think of it like this: If C3.ai were paying its employees in cash, they wouldn't have so much cash on hand.
Instead, they're pushing the cost onto their investors, whose shares become diluted.
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6) Is Empire Elite Growth Worth Buying?
The only thing really left to address is whether Empire Elite Growth is a newsletter worth buying.
One thing to consider is that it's pretty expensive at $2,000 a year.
There's a rule in investing that you should never spend more than 1% of your trading account on stock research.
If you do, the cost will eat into your gains too much and make it hard to beat the market.
So for this investing newsletter to be worth it, you'll need around $200,000 to invest.
Additionally, there are no refunds.
You can only get a lame credit refund to spend on other Empire Financial products.
Lastly, the newsletter picks long-term buy and hold, mid, and small-cap stocks.
So expect volatility with these stock picks.
This isn't for people obsessed with price movement and easily spooked.
Wrapping Things Up
So that's the end of my post outlining Enrique Abeyta's "#1 AI Stock for 2023."
The company he's hyping up is C3.ai.
C3.ai has reasons to invest in it, but there are definitely concerns.
The company seems to have gotten off to a horrific start, as the stock has lost nearly 90% of its value since the company went public.
The company has had some solid years of growth, but things have slowed down, and now the company says to expect only 5% growth this year.
C3.ai is a long way from profitability, and that causes a lot of risk.
But those are the kinds of stocks that get recommended in Empire Elite Growth.
High risk, high reward.
Smaller companies like this can be harder to predict but tend to have higher gains.
Under the right circumstances, this stock could take off.
Or it could crash.
Plan on investing in this company?
Let me know below what you think!
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