Ark Investment Management operates a portfolio of exchange-traded funds (ETFs) focused on innovative technology stocks. Its founder and chief investment officer, Cathie Wood, thinks software companies could be the next big opportunity in the artificial intelligence (AI) industry. In fact, she predicts they will eventually generate $8 in revenue for every $1 spent on chips from suppliers like Nvidia.
Since making that forecast last year, Wood has plowed money into leading AI software start-ups like OpenAI, Anthropic, and xAI through the Ark Venture Fund. Plus, Ark's ETFs hold several publicly traded AI software stocks like Meta Platforms, Tesla, and Microsoft.
If Wood turns out to be right about AI software companies, here's why C3.ai (NYSE: AI) could be one of the biggest winners.
C3.ai was founded in 2009 to help businesses unlock the power of predictive analytics, which is better known today as AI. It was the first company of its kind, and it now offers more than 40 turnkey and customizable AI applications to organizations in 19 different industries, including oil and gas, financial services, and manufacturing.
It takes a considerable amount of time, money, and expertise to build AI software from scratch, which is why many businesses turn to third parties -- and C3.ai can deliver finished applications to customers within six months of an initial meeting.
Georgia-Pacific manufactures pulp and paper for consumer products, building supplies, packaging, and more. The company's machines each have over 5,000 sensors that produce 1 billion data points every day. Georgia-Pacific uses C3.ai's Reliability application to help with predictive maintenance, and so far, it has led to a 5% improvement in overall equipment effectiveness. Plus, C3.ai is so good at tracking technical issues that Georgia-Pacific employees now spend 80% of their time addressing problems instead of searching for them.
That story isn't unique. Oil producer Shell has deployed more than 100 customized C3.ai applications to monitor more than 10,000 items of equipment, reducing carbon emissions and also the probability of catastrophic failures. Similarly, Dow, which is one of the world's largest chemical manufacturers, has reduced equipment downtime by 20% thanks to C3.ai's predictive capabilities.
Demand for C3.ai's software is soaring. During the recent fiscal 2025 first quarter (ended July 31), the company closed 51 agreements through its partner network, which includes Alphabet's Google Cloud, Amazon Web Services, and Microsoft Azure. That was a whopping 151% increase from the year-ago period.