The AI Bubble is OVER | Crash Warning

software artificial intelligence

companies are disappointing I really

think this is the way forward that

software artificial intelligence

artificial intelligence companies

disappoint that's mostly because

remember what started the AI Revolution

let's start at the AI Revolution was

Nvidia Nvidia following GPT right we had

GPT it's like look oh my gosh we have

this incredible chatbot what now we have

services like mid-journey that you can

plug into Discord and have beautiful

images as well and we need a lot of gpus

to process this sort of data and

information and content creation and so

we get a couple great pieces of software

that turn into everyone in the world

wanting to create another great piece of

software many of which just built on the

backs of open AI uh and then obviously

subsequently Nvidia and otherwise and

all of a sudden there's this want that

all of the Legacy companies the

snowflakes of the world the docusigns

the crowd strikes the cloudflare that

all of a sudden all of them are going to

become fantastic AI companies overnight

and so far that appears just not to be

the case especially after you read the

earnings calls at snowflake where you

get a really good heads up that

um maybe the CEOs themselves aren't even

that confident but not only is it the

CEOs that aren't even that confident

about their ability to actually generate

profits from artificial intelligence but

it might not even be sort of the tech

Bros that are generating the biggest

revenues for software might end up being

Healthcare which then the question is

okay well is it the healthcare companies

themselves that are going to make most

of the money or is it these other

companies that are going to make money

from AI That's the big question right

now is who's actually going to make

money from Ai and who it's not

apparently is Oracle with apparently now

suggesting that their results the street

now suggesting that the results of the

Oracle earnings are raising questions

about the timing of generative AI a

demand turning into Revenue across the

broader business cycle and quite frankly

I looked this I'm like

duh like the whole AI stuff started

about six months ago wow this is really

when things maybe February so six to

seven months ago how do you expect these

massive software companies to turn

around uh and uh and and start all right

that's it we know exactly how to make

money with this they don't snowflake

literally said it best in their last

earnings call Snowflake and their CEO

literally made the argument that you

know everybody's kind of just been

thrown into this foray and nobody's

figured out how to make actual money

from it yet except for NVIDIA and

obviously therefore subsequently the

chip manufacturer so uh my opinion is uh

again if you're looking at those

software artificial intelligence

companies

probably just something to keep in mind

that it might end up taking a little bit

more patience

now one thing that uh you know when it

comes to software that people will

software companies that people do like

in the artificial intelligence play has

to do with advertising and data centers

and specifically

trade desk uh Facebook meta and uh

Google uh potentially still being uh and

AWS as well as Microsoft potentially

still being up there in terms of

opportunities to invest in AI where

you're kind of at that next layer where

you've kind of got right if there's open

Ai and then there's all the chip stack

Underneath It All that has to run on

servers so how about the server

providers which Oracle is as well right

and no surprise the these these server

revenues those do well but the question

is what about all the apps that run on

them are those actually going to make

money and a lot of that is in much more

doubt now than uh than people had hoped

uh but anyway anywho I mean you look at

sort of the hopium that went into some

of these plays as well and here's Oracle

look at the Opium he went from like 59

bucks in November straight up to 126

dollars I mean okay big deal you're

you're down eight percent now in

pre-market but you're just back to this

support level where you've been bobbing

around before so maybe it's actually not

that crazy from a stock point of view I

know when people hear oh my gosh you

know stocks down eight percent or

whatever even ten percent in the day

it's a big deal but Stock's done very

very well here so maybe this isn't that

big of a deal from a stock price point

of view but in terms of this happening

again just wouldn't surprise me to see

it happen again uh these uh these these

Services uh are going to be I think a

lot harder to sell than people think

mostly because every company is like oh

yeah we'll we'll turn on the AI button

maybe AI businesses aren't really going

to be able to figure out profitability

this is actually something that we've

talked about since the beginning of the

whole AI dilemma the beginning of the

whole AI dilemma I suggested probably

the best place to invest would be chips

and I was also heavily exposed to chips

and I wasn't saying that to be biased it

was just simply to say that if everybody

goes all in on AI the one place you can

guarantee is going to make money or the

chips look okay what Intel's doing

lately it's one of my favorite value

stocks I have a good chunk of exposure

to it's been doing excellently I

actually still think it's highly

undervalued but it's not just Intel

which is launching its own three

nanometer Fab uh actually that is going

online here in 2024 but it's TSM it's

asml it's it's your Nvidia it's your AMD

and my concern was that the SAS

companies would not be able to catch up

with with actually providing accelerated

revenues because they won't be able to

figure out okay how do we now convince

people to actually spend money on AI

The Slowdown that we've noticed

yesterday in the snowflake optimism in

their last earnings call which I

encourage you to read somewhat

foreshadowed what c3ai talked about

which I want to talk about in this video

but just to quickly remind you in the

snowflake analysis we realized that in

snowflakes earnings call even the CEO

feels unconfident about how much AI

Revenue there's going to be they feel

like companies are sort of getting

thrown into sort of jumping into the

pool of AI and then everybody's kind of

like okay now what like how do we make

money here

c3ai which in my opinion is mostly a

fraud uh okay that's a harsh word maybe

they're not a fraud I just think they're

like I I think their product is not

really proprietary I think their product

is their stock I'm being very aggressive

here because I don't like the company I

think it is a company that is going to

perform very poorly and have actually

always been pretty anti-c3 AI I I think

that mostly you have institutional

investors who are like I need AI

exposure let me put AI into Robin Hood

oh

oh c3ai Enterprise AI oh

invest that's honestly how I feel about

CTR c3ai like I think the only reason

stock is actually performed decently

this year is because people are not

looking at the fundamentals of c3i

because they're trash I'll pull them up

too but most importantly we got to talk

about what's recently happened here so

you've got c3ai it's up about 149 year

to date I actually think it has a lot

more to follow and it has recently

Fallen a chunk you can see that here

from its highs right around August 1st

it's not about 37 percent highs around

the middle of June it's down even more

down about 40 percent you've been on a

recent downtrend here with a little bit

of a recent correction over just the

last couple days here of about 12 and so

a lot of folks wondering Okay Kevin what

what happened well I I you know I don't

know but we're gonna find out together

all right ready and then we'll go look

at the fundamentals of it so c3ai gave

lackluster sales four tasks and set

profitability will take longer than

expected fueling anxiety the software

company is struggling to capitalize on

an enthusiasm for artificial

intelligence folks this is absolutely no

surprise this is exactly what I've been

saying on this channel since the AI hype

began it's going to be very difficult

for these companies to actually convince

especially regular consumers to just

spend a lot of money on AI most

consumers have no idea what they're

doing with artificial intelligence and

I'm not saying that to like insult

people it's just I think people have

gone in they've tried GPT 3.5 they're

like haha that's kind of cool and then

they never use it again you know they

find an excuse to never use it uh like

and not as a pitch but like one of the

one of the courses I made how to make

more money and get sh9t done faster is

on productivity and building your income

and that you can see all the courses at

me kevin.com we have a whole AI section

at

and what I designed the AI section

around is how can you actually use AI

like not oh let's find every AI tool

that exists in the world and go wow look

they're 2 000 AI tools nobody cares

about your 2000 AI tools most of these

companies are going to go straight

bankrupt like if I were a venture

capital fund I would be allocating

pretty little to all these crazy AI

software companies unless they really

were able to prove that they actually

had a revenues which I actually don't

think they're going to be able to do so

what you end up stuck with is a lot of

companies burning a lot of money on

server usage and most of them were going

to go bankrupt and then you'll see

Server usage stabilize and then demand

for like Nvidia chips and all that sort

of stabilize but I do think it's

interesting because you know you can

jump on over to some of these and I want

to look a little bit more at some of

this news headline but this was from uh

this was the nine months ending in Jan

January so not the most recent earnings

report but the one that I was basing my

frustration on on c3ai here's a company

that loses a hundred and at least about

50 million dollars a quarter 142 in nine

months and uh plant property and

Equipment if you look at free cash flow

you're actually about 200 million

dollars lost in a nine month period if

you look at Revenue growth over the year

their subscription growth is flat their

total revenue is actually negative their

gross profit is negative which means

their net loss almost doubled so uh it's

just disgusting they've got about 800

million dollars of cash about 60 million

dollars of bills so they still have cash

they could last a few years and they'll

end up burning this and I think bleeding

out unless they can figure out how to

make some more revs but anyway the

fiscal year adjusted loss is now

expected to be as much as 100 million

dollars in actual loss so when you

considering a cash flow it'll be even

more than that and previously uh

released forecasts they were expecting a

loss of about 75 mil so actually

expecting more of a loss that's kind of

crazy because it's like we're expecting

a 75 million loss now we're losing more

money or yeah now ai comes out and guess

what we're losing even more buddy oh

geez it's just embarrassing uh so c3a I

said it no longer expects to make a

profit on an adjusted basis in the

fiscal fourth due to new Investments

they're making into oh yeah okay listen

to this oh that's see this is another

thing I absolutely despise okay they're

not making new investments into r d you

ready for this new investments into

sales and marketing

oh no no like if you I mean like there's

some level of sales and marketing

obviously that's necessary uh like for

example if I say your opportunity to buy

any of the individual courses uh on

building your wealth stocks you're to

millionaire uh real estate investing

building your wealth whatever uh is is

going to go away because they're all

going to be bundled together as one

larger and more expensive software you

know set of software uh and uh and it'll

be more expensive if you don't buy soon

if I don't mention that then obviously

you don't sell but then if you just if

the only way you're trying to grow is

not by innovating doing research and

adding more value to your product which

I do all the time

and all you're just doing is running

more like Google ads let's say then then

are you really a good product I I don't

think so yeah personally I don't run

Google ads maybe we should a little bit

a little bit of remarketing never hurt

but anyway the market opportunity is

immediate and we intend to seize it says

the CEO right they intend to seize it

not with more r d but rather with

marketing more yes yes let's Market the

stock more because that's actually

usually all I see them the market it's

kind of crazy some investors will remain

skeptical about the company

uh it is the most shorted U.S stock as a

percentage of shares traded wow really

let's look at the uh short interest here

let's see here so if I go to the apps

portal I'll go ahead and pull this up

but I'll keep reading this in the

meantime so see through AI but shortage

shares have recently dropped a bit c3a I

projected sales 72 to 76 current period

lower from the average estimate of

analysts okay great

oh yeah this was another big thing with

c3ai I remember going through this when

I went through their last earnings call

that they have one client that

represents one third of the business

yeah actually I think I have it

I have it highlighted in here somewhere

uh but it was Baker yeah here it is

Baker Hughes uh basically Baker Hughes

makes up about one third of their

revenue and this is an oil field

contractor and what's kind of wild is

this company actually sold about one

third of the stake they had in c3ai

which a lot of people are looking at and

saying is a signal that Baker Hughes is

like yo the AI you guys have isn't that

great

so we're just gonna start like dumping

some of your stock as we you know try to

recoup what we can on the fact that

we're stuck in a contract with you oh

rip

so anyway the C3 AI hype not a surprise

that you're suffering not a surprise

that DocuSign is complaining not a

surprise that snowflake is complaining

that's what's made me very nervous about

the software uh stack for artificial

intelligence but uh oh well advertise

these things that you told us here I

feel like nobody else knows about this

we'll try a little advertising and see

how it goes congratulations man you have

done so much people love you people

looked up to you Kevin path right there

financial analyst and YouTuber meet

Kevin always great to get your take