C3.ai Stock Is Struggling for Support; Here's the Setup

C3.ai  (AI) - Get Free Report has been one of the stocks leading the charge for AI stocks, which is fitting given its name and ticker symbol.

It joins companies like Microsoft  (MSFT) - Get Free Report and Nvidia  (NVDA) - Get Free Report as the focus stocks in the artificial-intelligence space, although it’s certainly the most volatile of the three.

For instance, the stock more than doubled (up 160%) from the May 3 low to the May 30 high, then fell about 30% in a two-day stretch after the company reported earnings.

The results weren’t bad, but investors were initially let down by the guidance. (The report came after Nvidia had provided blowout guidance.)

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Ultimately, C3.ai shares ran more than 60% from the post-earnings lows and made new 2023 highs on the move.

As I said, it’s been a volatile ride.

Does the recent six-day skid provide investors with a warning sign or a buying opportunity? Let’s take a closer look at the stock.

Buy the Dip in C3.ai Stock

Amid the current decline, AI stock has seen a peak-to-trough decline of 35%. But after it briefly took out yesterday’s low, the stock has rebounded. At last check, the shares are up more than 4%, which is a good sign for the bulls.

The point at which the stock is finding support is also a good sign.

Aside from reversing off yesterday’s low, C3.ai is finding support on the 10-week moving average and near the 50% retracement, which measures from the recent high all the way down to the June low.

This is a tough but measured spot for traders. This morning’s reversal helps provide a clue, but they’ll need to see the stock gain traction over $35 to feel more comfortable.

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Ideally, C3.ai shares will be able to fill the gap up near $36.79. Above that and $40-plus could be back on the table.

The risk is that the stock's short-term moving averages — like the 10-day — turn to resistance and the move to the downside isn’t finished yet.

If that’s the case and AI stock can’t hold $31.50, then the $29 to $30 zone is back in play.

Not only was that a key resistance area through the first quarter, but it’s also where the 61.8% retracement and the 50-day moving average come into play.

C3.ai is a volatile holding and traders must respect its larger ranges and outsized moves. 

For now, keep an eye on that $31.50 level and let’s see whether it can gain some upside traction. 

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