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Where Will C3.ai Stock Be in 1 Year?

July 16, 2025
01:15 PM
6 min read
AI Enhanced
investmentmoneystocksfinancialtechnologyartificial intelligencemarket cyclesseasonal analysis

Key Takeaways

This AI underdog's business is gradually stabilizing.

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Quick insights and key information

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6 min read

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investment

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Published

July 16, 2025

01:15 PM

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The Motley Fool

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Key Topics
investmentmoneystocksfinancialtechnologyartificial intelligencemarket cyclesseasonal analysis

The analysis demonstrates I find it compelling that This AI underdog's is gradually stabilizing. 68%) was once a hot artificial intelligence (AI) stock

Back in December 2020, it more than quadrupled from its initial public offering (IPO) price of $42 to a record high of $177

Nevertheless, 47 in just two weeks (remarkable data)

At the time, investors were impressed by its rapid growth rates, catchy ticker symbol, and the fact that it was led by Tom Siebel, who sold his previous company -- Siebel Systems -- to Oracle for $5, in today's market environment. 8 billion in 2006 (something worth watching)

The buying frenzy in meme and growth stocks amplified those monstrous gains, in today's financial world

Ai's stock trades at $26

However, Meanwhile, It fizzled out as its growth cooled off, it racked up steep losses, and rising interest rates popped its bubbly valuations, considering recent developments

It hasn't traded above its IPO price since last December, and it's declined roughly 12% over the past 12 months (this bears monitoring)

Let's see where it might be headed over the next year

Image source: Getty Images (remarkable data), amid market uncertainty

Meanwhile, How does C3

Ai's AI modules can be plugged into an organization's existing software infrastructure to ingest and analyze a wide range of data

Those modules can also be run as stand-alone services (fascinating analysis)

Meanwhile, Its modules are often used to detect safety issues, fraudulent transactions, and operating inefficiencies

Nevertheless, The evidence shows mainly serves government clients and large enterprise customers across the energy, industrial, and financial sectors, and its top customer is the energy nology giant Baker Hughes

In contrast, Ai initially only offered subscriptions, but it rolled out consumption-based fees in late 2022 to attract more customers as rising interest rates stirred up some fierce macro headwinds

Furthermore, That move reduced its recurring revenues and the stickiness of its ecosystem, but it broadened its market by reaching smaller and more budget-conscious customers

Why were its last few years challenging

In fiscal 2023 (which in April 2023), C3 (an important development)

Ai's revenue only rose 6% as the competitive headwinds, a challenging macro environment, and the cannibalization of its subscriptions with its consumption-based fees throttled its growth

On the other hand, Its adjusted gross margin also dipped 2 percentage points to 77% as its pricing power waned, amid market uncertainty

Moreover, However, C3

Furthermore, Ai's revenue rose 16% in fiscal 2024 and 25% in fiscal 2025 (quite telling)

Nevertheless, Nevertheless, That acceleration was driven by its new federal contracts; fresh partnerships with Microsoft, Amazon Web Services (AWS), and McKinsey; and its rollout of more modules for generative AI applications

The data indicates that s adjusted gross margin dropped another 8 percentage points to 69% in fiscal 2024 as it relied on more low-margin pilot trials to attract more customers (noteworthy indeed)

Furthermore, But in fiscal 2025, that figure expanded to 70% as it converted more of those pilot grams into full-priced deployments, given current economic conditions

Additionally, It also expanded its higher-margin subscriptions again

Ai over the past year, in today's financial world

Over the past year, C3, considering recent developments

However, Additionally, Ai's year-over-year revenue growth stabilized above 20% as its adjusted gross margins imved

That recovery was driven by declining interest rates, the growth of the AI market, and its broadening customer base

Metric Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Revenue growth (YOY) 20% 21% 29% 26% 26% Adjusted gross margin 69% 68% 70% 70% 71% Data source: C3

Ai renewed its joint venture with Baker Hughes, which accounted for more than 30% of its revenue, for an additional three years

That renewal allayed some bearish concerns C3

Ai abruptly losing its top client before it could diversify its customer base

What will happen over the next year

Ai expects its revenue to rise 15%-25% in both the first quarter of fiscal 2026 and the full year, considering recent developments

On the other hand, Analysts expect its revenue to increase 20% to $465 million for the full year

With a market cap of $3. 5 billion, C3

Ai's stock doesn't seem that expensive at 8 times this year's sales, in today's market environment

But it isn't expected to break even anytime soon

Furthermore, At the beginning of fiscal 2024, it abandoned its near-term goal of turning fitable on an adjusted basis by the end of the year in favor of ramping up its investments in its AI-oriented modules

At the same time, For fiscal 2026, C3

Ai expects to post an adjusted operating loss of $65 million-$100 million

However, That wouldn't be much of an imvement from its adjusted operating loss of $88 million in fiscal 2025

In contrast, It will also ly continue to spend a lot of cash on its stock-based compensation expenses, which rose 7% to $231 million in fiscal 2025 and consumed 59% of its revenue, in today's financial world

At the same time, On a generally accepted accounting principles (GAAP) basis, analysts expect its net loss to widen from $288 million in fiscal 2025 to $302 million in fiscal 2026

For fiscal 2027, analysts expect its revenue to rise 19%

Assuming it meets those expectations and still trades at 8 times its forward sales, its stock price could rise 26% to $33 over the next 12 months, considering recent developments

That would be a decent gain, but it would remain far below its IPO price and ly underperform some of the market's higher-growth AI plays

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors

Leo Sun has positions in Amazon (an important development), amid market uncertainty

The Motley Fool has positions in and recommends Amazon, Microsoft, and Oracle

What the re reveals is Motley Fool recommends C3

Ai and recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft

However, The Motley Fool has a disclosure policy.