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. But today, C3. 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 make money.
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. What happened to C3. 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. YOY = year over year. More importantly, 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.