Is C3.ai Stock a Buy?

Leo Sun, The Motley Fool

Mon, Jun 2, 2025, 1:15 AM 5 min read

• C3.ai disappointed a lot of investors over the past four and a half years.

• Its revenue growth is stabilizing, but its net losses are still widening.

• Its share count is rising, and it doesn’t look cheap relative to its growth potential.

• 10 stocks we like better than C3.ai ›

C3.ai (NYSE: AI), a developer of enterprise artificial intelligence (AI) software, attracted a stampede of bulls when it went public on Dec. 9, 2020. It opened at $100 a share on the first day, which was more than double its IPO price of $42, and closed at a record high of $177.47 just two weeks later.

At its peak, C3.ai's market cap reached $17 billion, which was 93 times the $183 million in revenue it would actually generate in fiscal 2021 (which ended in April 2021). That bubbly valuation, further inflated by the buying frenzy in meme stocks, became unsustainable as its growth slowed down, it racked up more losses, and rising interest rates squeezed its valuations.

Today, C3.ai trades at about $26.50 a share with a market cap of $3.5 billion, or 7.5 times the $465 million in revenue it's expected to generate in fiscal 2026. Should contrarian investors consider that pullback a good buying opportunity? Or is it a falling knife that will drop even lower?

C3.ai develops AI modules that can be installed in on-premises software, edge networks, public cloud platforms, and hybrid clouds to ingest a wide range of data. These modules can be integrated into a client's existing software applications or accessed as stand-alone services. It originally offered only subscriptions, but it rolled out usage-based fees in late 2022 to attract more customers.

C3.ai attracted a lot of attention for three reasons. First, it was founded and led by Tom Siebel, who sold his company Siebel Systems to Oracle for $5.85 billion in 2006. Second, its revenue surged 71% in fiscal 2020, and the bulls expected it to maintain that momentum as the AI market expanded. Lastly, its catchy ticker symbol attracted a lot of attention from retail investors.

C3.ai serves a wide range of customers across 19 different industries. But its top customer is the energy giant Baker Hughes, which accounted for over a third of its revenue in fiscal 2024 through a joint venture that started in 2019.

That customer concentration isn't ideal, but C3.ai recently renewed that crucial deal through June 2028 upon its expiration this April. That renewal could buy it more time to diversify its customer base.

Data source: C3.ai.