10 Worst Small Cap AI Stocks To Buy According to Short Sellers

2. C3.ai Inc. (NYSE:AI)

Short % of Shares Outstanding As of August 30: 22.31%

Market Capitalization as of September 14: $2.96 billion

Number of Hedge Fund Holders: 18

C3.ai Inc. (NYSE:AI) is an enterprise AI company that provides software and services to help businesses solve real-world problems by integrating AI into their operations. Offerings include a comprehensive AI suite, pre-built AI applications, and consulting services, empowering businesses to increase efficiency, reduce costs, improve decision-making, and gain a competitive edge through AI-driven solutions.

The company started the first quarter of fiscal 2025 with a revenue of $87.21 million, recording a 20.52% improvement from FQ1 2024, exceeding all expectations. The loss per share was $0.05, lower than $0.11 in the previous quarter. Subscription revenue alone was $73.5 million, up 20% from a year ago.

The fiscal first quarter ended with 71 closed agreements, including 72 new pilots marking a 117% year-over-year increase in the pilot count. C3.ai Inc. (NYSE:AI) also signed new agreements with GSK, Eletrobras, Valero, Swift, SmithRx, Sanofi, government agencies, and others. It expanded its footprint in state and local government, signing 25 agreements in various states.

It formed 51 new partnerships this quarter, with 72% of agreements closed through the partner ecosystem. The partner-supported bookings grew 94% year-over-year. It closed 40 agreements with Google Cloud, a 300% increase.

C3.ai Inc. (NYSE:AI) has a first-mover advantage in the enterprise AI market. As AI value seems to be shifting from hardware to software, this company’s long-term growth prospects improve. Analysts and hedge funds consider it a leading AI stock due to its strong market position and successful execution.

Bireme Capital stated the following regarding C3.ai, Inc. (NYSE:AI) in its fourth quarter 2023 investor letter:

“Our final new short position is in a company called C3.ai, Inc. (NYSE:AI). Originally named “C3 Energy,” C3.ai has changed its name multiple times based on whatever hot new trend they were supposedly capitalizing on. The “energy” theme was about smart grid and cap-and-trade. Then the firm changed its name to “C3 IoT” to attempt to capitalize on the Internet of Things buzz. After that trend fizzled out, the moniker was altered once more, with the company capturing the “AI” ticker in December 2020 – a savvy move if it wants to sell stock to credulous investors, but irrelevant to its business prospects. As Kerrisdale put it, the company is a “minor, cash burning consulting and services business masquerading as a software company.”