Oppenheimer upgraded c3.ai (AI) and Cloudflare (NYSE:NET) from Perform to Outperform, with price targets of $40.00 and $85.00, respectively.
According to analysts, their June initiation was positive on C3.ai (NYSE:AI)'s long-term growth opportunity, but neutral on the stock. Oppenheimer noted positive changes in C3.ai since then, including a guidance reset, a shift to a usage-based model, and real-world customer benefits.
Analysts highlighted the 20% stock underperformance since mid-June despite C3.ai's rising revenue growth (from 0.1% in Q4/23 to 23% estimated for Q2/24). The company's focus on AI is seen as a sustainable advantage, positioning it as a key player in driving new revenue and productivity improvements, with expected growth acceleration into 2025.
Regarding Cloudflare, analysts upgraded the company citing its strength in AI and edge computing. This rating change also reflects an end to the trend of lowering guidance and forecasts a resurgence in growth for the latter half of 2024
“We think the company is well-positioned to offer edge compute at scale, consolidating compute/security/networking on one infrastructure enabling one common developer platform (Workers). It is also deploying AI infrastructure on this platform called Workers AI and is partnering with some of the largest technology companies,” commented analysts.
Its Workers AI platform, less than 2 months old, is already demonstrating strong demand and interesting new user cases, from small startups to large enterprises. While concerns about gross margins and free cash flow compression persist in the short term, analysts mentioned that Cloudflare is expected to experience sustained revenue growth, bolstered by the enduring momentum in AI.