C3.ai Stock (AI) Rallying Off Lows With Earnings on Deck – Sentiment Remains Mixed

C3.ai (NASDAQ: AI), a leading enterprise AI software provider, is set to announce its fourth quarter and full fiscal year 2025 financial results after the U.S. market closes this afternoon. This will be followed by a conference call and webcast at 5:00 p.m. ET.

For the quarter, analysts expect C3.ai to post revenue of approximately $107.7 million, representing a 24.38% year-over-year increase, an improvement from last year’s 19.6% growth. The consensus adjusted loss per share is projected at -$0.20, a decline from the $0.11 loss posted in the same quarter YoY. Analysts have largely maintained their estimates over the past 30 days, suggesting stable expectations. Notably, C3.ai has only missed Wall Street’s revenue estimates once in the past two years, typically exceeding expectations by an average of 1.4%. 

Ahead of the earnings release, C3.ai’s stock closed at $23.92, for a gain of 5.28% on the day. This increase could reflect growing bullish sentiment or those looking to take a position prior to the report, expecting positive results. 

Zooming out, and the trend has been bearish, with both the YTD decline of 31%, and the 80% drop since listing back in 2020 not making for pretty viewing for long term holders. Despite these longer term trends, the stock has found some support from recent lows, with a rally of more than 30% following April's low. This only makes the stock harder to place leading into earnings, with the picture clearly mixed.

C3.ai’s revenue growth has accelerated since its shift to a consumption-based pricing model. However, the company continues to report significant losses as it invests heavily in expansion. For the first three quarters of fiscal 2025, C3.ai posted a GAAP net loss of $209 million, though the non-GAAP loss (which excludes non-cash expenses such as stock-based compensation) was $30.4 million. Management has guided for a potential non-GAAP loss of around $40 million in the fourth quarter, and investors will be watching closely for any deviation from this figure. 

The company’s price-to-sales ratio has dropped to 8.3, a 14% discount to its three-year average and below its level at the end of 2024. This lower valuation, combined with robust revenue growth, has led some analysts to suggest C3.ai could be a bargain ahead of earnings, with potential for a post-report rally if results beat expectations. 

Despite growth, some analysts remain skeptical due to the lack of progress toward profitability. C3.ai’s continued losses set it apart from peers that have managed to cut expenses and approach or achieve profitability. This remains a key risk and point of debate for investors considering the stock’s long-term potential. 

Back in April, Analysts were quick to lower their target price on C3.ai's shares. KeyBanc lowered the firm's price target from $21 to $17, keeping an “Overweight” rating on the shares, showing optimism. Morgan Stanley remain more muted, keeping an “Underweight” rating on the shares whilst lowering their price target from $30 to $20. DA Davidson were another to lower price target from $25 to $18, keeping a “Neutral” rating on the stock.

What Next?

C3.ai’s strategic relationships, particularly with Microsoft, have been highlighted as growth drivers. The company’s focus on enterprise AI applications and domain-specific generative AI offerings positions it well in a rapidly expanding sector. However, challenges such as operating losses and cash flow concerns persist. 

Peers in the data and analytics software segment have reported strong year-over-year revenue growth, supporting expectations for C3.ai’s continued momentum. 

Despite sector momentum and strong revenue growth, C3.ai’s path to profitability remains uncertain. The company continues to report significant losses, setting it apart from peers that have managed to rein in expenses and approach breakeven. This ongoing lack of profitability is a central concern for investors, especially as the broader AI sector matures and market participants become more discerning.

C3.ai’s strategic partnerships and domain-specific AI offerings provide potential upside, particularly as demand for enterprise AI solutions accelerates. However, the company’s ability to translate top-line growth into sustainable profits will be the key determinant of its long-term value.