Nvidia (NASDAQ: NVDA) and C3.ai (NYSE: AI) are distinct players in the realm of artificial intelligence (AI) investments. Nvidia, a leading provider of data center GPUs, has showcased a remarkable 480% surge in its stock over the past three years. In stark contrast, C3.ai witnessed a substantial 50% decline in its stock value during the same period. While Nvidia’s growth stems from its robust sales of data center GPUs, C3.ai’s trajectory suffered as sales stagnated and losses accumulated. As we navigate through the choice between these two stocks, Nvidia’s dominance appears unwavering. Will it sustain its momentum over C3.ai?
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Leader of the Pack Versus the Underdog
Nvidia holds the crown as the world’s primary producer of discrete GPUs for PCs and servers, with a significant shift in revenue generation towards data center GPUs driven by the burgeoning AI market. C3.ai, on the other hand, operates as a software company integrating AI algorithms into large organizations’ existing frameworks. Despite Nvidia’s revenue plateau in fiscal 2023, a remarkable 126% surge in fiscal 2024 signified burgeoning demand for its AI chips, with analysts projecting another 98% increase in fiscal 2025. In contrast, C3.ai faced a modest 6% revenue uptick in fiscal 2023, marking a turnaround with a 16% growth in fiscal 2024 and anticipations of a 23% acceleration in fiscal 2025.
Nvidia’s stock trades at 43 times forward earnings, indicating stability against its accelerated growth, whereas C3.ai’s stock counts remain lower due to stock-based compensations. With Nvidia’s diversified and profitable trajectory, the scales tilt in its favor over C3.ai.
Profitability Prowess
While Nvidia stands as a beacon of consistency in profitability based on generally accepted accounting principles (GAAP), C3.ai grapples with accumulating losses on both GAAP and non-GAAP fronts. Nvidia’s EPS is set to soar by 109% in fiscal 2025 on a non-GAAP basis, quite the contrary to projections of C3.ai witnessing a widening non-GAAP net loss as it escalates AI investments.
Notably, during the past three years, C3.ai experienced a significant increase in share count, a manifestation of stock-based compensation facilitating salary subsidies. In contrast, Nvidia’s stock buybacks led to a 1% decline in its share count, enhancing stability in its financial structure.
The Ultimate Choice: Nvidia Reigns Supreme
With an unassailable combination of size, rapid growth, profitability, and a substantial competitive edge, Nvidia emerges as the clear favorite over C3.ai. While C3.ai remains resilient and poised for a resurgence, it must navigate the path of reducing losses, broadening its client base, and fortifying its sustainable business model to match Nvidia’s prowess.
Contemplating an Investment in Nvidia
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