C3.ai (NYSE: AI) is one of the most talked-about artificial intelligence (AI) stocks on the market today. With a platform purpose-built for enterprise customers, early traction in generative AI, and expanding partnerships with cloud and consulting giants, the company checks many of the right boxes for investors looking to gain exposure to the AI megatrend.
However, before getting swept up in the narrative, it’s worth pausing to look beneath the surface. While the company is making the right strategic moves, it’s still early — and the numbers reveal a business that has a lot more to prove.
This article will cover two red flags to keep in mind.
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C3.ai has carved out a unique position as a pure-play enterprise AI platform company. It doesn’t build flashy consumer chatbots. Instead, it helps large organizations deploy AI across real-world operations — from supply chains to energy grids to battlefield logistics.
Using the C3 Agentic AI Platform, a company can quickly develop and implement AI in its operations or leverage C3 AI Applications for prebuilt applications in sectors like energy, defense, and manufacturing. Later on, enterprises can deploy C3 Generative AI to create AI agents.
By focusing on prebuilt agents and vertical-specific tools, C3.ai aims to simplify deployment and shorten the time from pilot to production. Moreover, it’s moving toward a consumption-based pricing model, allowing customers to start small and scale their usage over time — a shift that aligns incentives and could smooth out the adoption process.
In short, there’s a solid case for optimism about C3.ai’s long-term potential, especially as large enterprises’ adoption of AI picks up.
Like most growth companies, C3.ai incurs significant cash expenditures as it invests in platform development and customer acquisition. The company has been unprofitable since its inception in 2009, with accumulated losses totaling $1.4 billion as of April 30, 2025.
That’s despite years of riding a major AI tailwind. It guided for non-GAAP (adjusted) loss from operations to be around $100 million in fiscal year 26, ending April 30, 2026. While it ended the year with $743 million in cash and equivalents, that cushion could shrink quickly if the current pace of losses continues.
It’s not uncommon for high-growth software companies to operate at a loss for years — Amazon and Salesforce are examples. However, the issue is that C3.ai’s growth hasn’t kept pace with spending. For instance, it guided the fiscal year 2026 revenue growth rate to be between 15% and 25% — solid, but nothing to shout about.
The silver lining here is that growth has slowly accelerated (averaging above 20%) over the last five quarters, suggesting that the company could deliver at the higher end of its guidance.
Additionally, the AI company signed 264 agreements in fiscal year 2025, representing a 38% year-over-year increase. Given that there’s usually a time lag between signing agreements and revenue flowing in, investors may see better growth rates in the coming quarters.
The bottom line is that C3.ai is spending like a hypergrowth company but growing like a mature one. It needs to either accelerate top-line growth or rein in operating losses — ideally both.
When C3.ai went public, it was one of the few public companies offering a full-stack enterprise AI platform. That’s no longer the case.
Today, C3.ai faces pressure from multiple directions. On one side, big tech companies, such as Microsoft, are embedding AI into Azure and its entire software stack. Similarly, Google Cloud and AWS are investing heavily in AI infrastructure and developer tools. These firms not only have more capital, but they also already have established customer relationships.
Besides, smaller but fast-moving start-ups are building narrow, agentic AI tools for sales, logistics, customer service, and more, many of which are easier to implement and priced more flexibly. Even C3.ai’s closest peer, Palantir, has stepped up its generative AI strategy with its Artificial Intelligence Platform (AIP) — gaining traction in both government and commercial markets.
To stay relevant, C3.ai must continue to solve complex customer problems in core verticals such as defense, energy, and industrial manufacturing. If not, it risks being relegated to a niche role — or worse, being left behind as newer solutions become the standard.
In short, it’s no longer enough for the company to have a head start. It must continue to deepen its moat or risk losing its competitive edge in the long term.
C3.ai is doing many things right. It’s focused on enterprise AI rather than the overcrowded consumer AI market, is early in a large market, and is investing heavily in its future.
Still, the question is whether the company can scale quickly enough to become the gold standard in its key verticals and, along the way, reduce its losses to deliver massive profits.
Until then, an investment in C3.ai stock remains highly speculative.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Palantir Technologies, and Salesforce. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Thinking of Buying C3.ai Stock? Here Are 2 Red Flags to Consider. was originally published by The Motley Fool
