Out Fox The $treet

Update - Feb. 3 C3.ai is up over 100% in a month and an analyst comes out with a $30 PT. Where was this analyst at $10??? The stock is getting very frothy here.  -C3.ai (NYSE:AI) continued its surge to start 2023, gaining 15% on Friday, as investment firm D.A. Davidson & Co. started coverage on the artificial intelligence software company, calling a "truly scarce asset." -Analyst Gil Luria initiated coverage on C3.ai (AI) with a buy rating and a $30 per-share price target, implying some 20% from current levels. Update - Jan. 31 C3.ai has surged to $20 based on solely implementing ChatGPT and offerings from Google into their AI products. Investors shouldn't chase this rally.  C3.ai ( NYSE: AI ) shares   jumped nearly 19%   in early trading on Tuesday after the Thomas Siebel-led company   announced   it was introducing a new artificial intelligence focused product suite. The new suite, known as C3 Generative AI Product Suite, uses natural langua...

  DocuSign is very unloved by Wall St. analysts with only 5 of 21 analysts having a Buy rating. The digital signature company continues to produce strong growth, though billings guidance continues to weaken. The stock trades below pre-covid levels despite a substantially larger revenue base providing an appealing entry point for a digital contract future. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   DocuSign  ( NASDAQ: DOCU ) was a poster child for the covid excesses where business lockdowns necessitated a shift into their digital signature product offerings. The stock has fallen from a high over $300 to a low  below $50 making DocuSign a very hated stock here. My  investment thesis  is Bullish on the stock following the collapse and the lack of market interest in a technology industry leader. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. P...

Microsoft announced new capital return plans including an 8% dividend hike. The new stock buyback plan has limited ability to impact the stock considering the surging stock over the last few years. The net payout yield is average for the current market. After the close, Microsoft (NASDAQ: MSFT )  released  that the company will add to the existing capital return program. The total of the share repurchase program is attention grabbing, but investors need to consider whether the amount is actual impactful to the stock. Read the full article on Seeking Alpha.  Disclosure: No position 

Workday has traded sideways for a couple of years as multiple compression takes over. Investors shouldn't be fooled by high analyst price targets with the negative trend towards lower targets. The stock faces more multiple compression going forward that will impact price gains. The tech sector is littered with stocks over the last couple of years that came public at excessive valuations and headed higher for awhile. The market justified these sky-high prices due to fast growth rates and a new paradigm in cloud computing or social media. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Bernstein Research provided a compelling list of prospects in the software area that could become merger and acquisition targets. The research firm has provided a list of fast growing software stocks over the years that have a high level of buyouts. Analyst Toni Sacconaghi provides an interesting case for why hardware companies might be interested in these software players. Amazingly Millennial Media is listed as the fast growing stock over more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After the close on Monday, Red Hat (RHT) announced Q2 earnings that met analyst estimates (assuming the removal of acquisition costs). The concerning part remains that earnings were flat year-over-year. Sure, the company is ramping up marketing and research expenses, but most stocks have a difficult time remaining at 40x multiples during those transitions. The interesting part though is that the stock was only down 3% as of writing this article. After a decent rally this year, a normal stock would get hit harder off these weak numbers. The company is a leading provider of open source software solutions, taking a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

When reading through the recent Salesforce.com (CRM) Dreamforce Analyst Session presentation (obtain from the upper right hand corner box), a reader should be constantly struck by the desire to grow at all costs. Both Sales & Marketing and Research & Development costs soared beyond the rate of revenue growth. Another striking point is slide 55 that shows how the FY12 Guidance Midpoint for revenue has increased by $185M or roughly 9% while the Non-GAAP EPS has dropped. Now the earnings drop is mostly associated with the purchase of Radian6, but it further highlights how CRM is buying revenue. Read the full article at Seeking Alpha. Disclosure: Long MSFT. Please review the disclaimer page for more details.