AI Stocks Up Today: What Earnings Season Tells Us About NVIDIA and C3.ai

Investing

Published: February 10, 2025 3:50 pm

Artificial intelligence stocks were broadly moving higher Monday with industry leaders like Nvidia (NASDAQ:NVDA) and Palantir Technologies (NASDAQ:PLTR) rising about 4% in late afternoon trading.

Yet the sector as a whole was seeing bullish support, and some like Super Micro Computer (NASDAQ:SMCI), were surging 13% higher. It indicates the earthquake unleashed by Chinese AI lab DeepSeek wasn’t going to be as devastating as originally thought.

24/7 Wall St. Insights:

AI stocks were moving higher on Monday as Taiwan Semiconductor Manufacturing (TSM) provided an update on its first-quarter.
Nvidia (NVDA) was moving higher and has wiped away all vestiges of the 17-point drop it suffered after China’s DeepSeek AI was released.
Other AI names, such as C3.ai (AI), also jumped on the news, but not all AI stocks are equal.
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The AI market is healing

Taiwan Semiconductor Manufacturing (NYSE:TSM) said its first-quarter revenue was going to come in at the lower end of its guidance of $25 billion to $25.8 billion as the impact of an actual earthquake that hit Taiwan in January affected some of its facilities. It equates to a 36% year-over-year increase.

However, it planned to “recover the lost production” and made no changes to its full-year guidance. Demand continues to far exceed supply and it would double by the end of 2025 the amount of high-end chip-on-wafer-on-substrate needed to produce Nvidia’s advanced AI chips.

That bodes well for Nvidia, which is scheduled to report its own earnings on Feb. 26.

Nvidia’s outlook still looks bright

Nvidia has said its supply of its latest Blackwell chips is sold out through the end of the year. Yet it was one of the biggest losers when DeepSeek announced its R1 AI model had beat all top-end models out across numerous benchmarks despite being trained on a shoestring budget using underpowered Nvidia chips.

The market became concerned that demand for the chipmaker’s most expensive AI accelerators would wane and it would sap its pricing strength as developers opted for cheaper alternatives. And because DeepSeek R1 was open-source, developers could modify the algorithm, fine-tune it, and build on its foundation.

Investors, though, are deciding most of those fears are overblown, particularly as there are questions whether DeepSeek really did have access to Nvidia’s popular advanced H100 chips that are used by Western hyperscalers.

NVDA stock is up 3.6% in late day trading today.

Beware second- and third-tier AI stocks

Other AI names were up as well, including C3.ai (NYSE:AI), which was rising 5.9% on Monday. The business process software provider is also scheduled to report earnings on Feb. 26 after the markets close.

It forecasts fiscal third-quarter revenue will be in a range of $95.5 million to $100.5 million, which at the midpoint implies a 25% jump from the year ago period, but a less than 4% increase sequentially.

Adjusted net losses of $38.6 million to $46.6 million represents a 42% improvement at the midpoint compared to last year’s $72.6 million loss.

C3.ai, though, is a perennial money-loser and it continues to spend a lot of money on stock-based compensation, some $57 million in the fiscal second quarter, or virtually all of its gross profit.

Not all AI stocks are created the same and despite the rise in c3.ai’s stock today, it is one investors should steer clear from.