The artificial intelligence trade is maturing.

After exuberance around the potential for AI sent tech stocks soaring into the summer and had some Wall Street strategists boosting their outlook for the stock market overall, investors have shifted back to a focus on the fundamentals.

The latest iteration played out on Wednesday night when C3.ai (AI), which had seen its stock rise more than 200% this year, announced earnings.

C3.ai, an artificial intelligence software company, said it expects 2024 revenues in a range of $295 to $320 million, roughly in line with Wall Street’s expectations for $308 million. But the company also now anticipates operating income losses in a range of $70 to $100 million. Previously the company had projected losses of $50 to $70 million. It also no longer expects to be profitable on a quarterly basis by the end of 2024.

“We have made the decision to invest in generative AI, to invest in lead generation, to invest in branding, to invest in market awareness, and to invest in market and customer success related to our generative AI solutions,” C3.ai CEO Thomas Siebel told investors on the earnings call.

The stock fell more than 15% just after the opening bell on Thursday morning before paring losses to about 12%.

“We don’t see top line metrics [revenue] materially inflecting higher at this point to justify the increased investment posture [on generative AI],” JPMorgan analyst Pinjalim Bora wrote in a note on Thursday.

It hasn’t just been C3.ai seeing a shift in market sentiment during the most recent quarterly earnings reports, which kicked off in earnest at the end of July.

Investors dumped Microsoft (MSFT) stock the day after the company said AI contributions to revenue will be gradual. Snap (SNAP) stock tumbled as the rising cost of AI investment weighed on shares. The same could be said for AMD (AMD), which promised the market for AI accelerators will reach more than $150 billion by 2027. Analysts feared expectations may have grown too high.

Citigroup’s Scott Chronert recently told Yahoo Finance that the AI hype has entered the “show me” stage.

“I don’t think the AI trend and the influence it can have on S&P 500 earnings longer term is at risk here,” Chronert told Yahoo Finance Live. “I think it’s still an important part of the narrative going forward. But expectations … we just have to give them room to adjust as previous events have unfolded and now we’re looking at new incremental information.”

Even the companies that have continued to show AI is changing their business haven’t seen the same pops in their stock price over the past month, casting doubt over whether the AI rally has run its course and stock valuations are too high.

In the most recent quarter, AI darling Nvidia increased adjusted earnings by 429% compared to the same period last year. The chip giant forecasted next quarter revenue to come in at roughly $16 billion, nearly 30% higher than what Wall Street analysts had projected.

On the next day of trading, the stock rose just 0.1%. Nvidia shares are now down about 3% since reporting earnings on Aug. 23.

FILE - Nvidia Co-founder, President, and CEO Jensen Huang speaks at the Taiwan Semiconductor Manufacturing Company in Phoenix on Dec. 6, 2022. Computer chip maker Nvidia has turned the artificial intelligence craze into a springboard that has catapulted the company into the constellation of Big Tech’s brightest stars. The company reports earnings on Wednesday. (AP Photo/Ross D. Franklin, File)

Nvidia CEO Jensen Huang speaks at the Taiwan Semiconductor Manufacturing Company in Phoenix on Dec. 6, 2022. (Ross D. Franklin/AP Photo, File)

Josh Schafer is a reporter for Yahoo Finance.

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