The artificial intelligence (AI) industry is experiencing significant growth, and while semiconductor giant Nvidia has dominated the market, there are attractive opportunities in software companies. Two such companies are C3.ai and Lemonade, which have been developing AI software since 2009 and 2015, respectively.
C3.ai, the world’s first enterprise AI company, offers a portfolio of over 40 ready-made and customizable AI applications. Dow, a chemical manufacturing giant, uses C3.ai’s applications for predictive maintenance, reducing downtime by 20%. Georgia Pacific, a paper, packaging, and building materials manufacturer, has seen a 5% increase in equipment efficiency using C3.ai’s Reliability platform. C3.ai sells its applications directly to businesses and through partnerships with major cloud platforms like Microsoft Azure and Amazon Web Services. The company reported a 70% increase in customer engagements and a 20% revenue growth in the recent fiscal quarter, indicating a fast-growing demand for AI in the corporate world. As of June 27, C3.ai trades at $28.55 per share, an 82% discount to its all-time high.
Lemonade, founded in 2015 with the aim to disrupt the insurance industry, uses AI across its entire business. Its AI chatbot, Maya, can write quotes in under 90 seconds, and its AI bot, Jim, can pay claims in under three minutes. Lemonade has attracted over 2 million customers and has successfully acquired younger cohorts in the 19 to 34 age bracket. During the first quarter of 2024, Lemonade’s in-force premiums hit a record high of $794 million, and its gross loss ratio fell eight percentage points to 79%. These metrics resulted in a record $119.1 million in revenue during Q1. Lemonade is still generating losses at the bottom line but expects to be cash-flow positive by the end of this year. As of June 27, Lemonade’s stock closed at $16.46, an 89% discount to its all-time high.
Both C3.ai and Lemonade were affected by the tech frenzy in 2021, leading to unsustainable valuations. However, with consistent growth and clear progress since then, the steep drop in their stock prices could present a great opportunity for investors.
