C3.ai (AI 0.72%) was one of the hottest tech stocks of 2020. The enterprise AI software company went public at $42 a share that December, and it opened at $100 before hitting an all-time high of $177.47 later that month.

Today C3.ai's stock trades below $20 a share for three simple reasons. First, its valuations had reached unsustainable levels. At its peak, it was valued at $17 billion -- or 93 times the revenue it would actually generate in fiscal 2021 (which ended last April). That frothy price-to-sales ratio made it an easy target for the bears as rising interest rates crushed the market's pricier growth stocks.

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Second, C3.ai's growth decelerated after its public debut. Its revenue rose 71% in fiscal 2020, but grew just 17% in fiscal 2021 as the pandemic disrupted its core energy and industrial markets. Its revenue rose 38% to $253 million in fiscal 2022 as those headwinds waned, but it only anticipates 22%-25% growth in fiscal 2023 as it grapples with several delayed deals.

Lastly, C3.ai remains deeply unprofitable. Its net loss narrowed from $69 million in fiscal 2020 to $56 million in fiscal 2021, but more than tripled to $192 million in fiscal 2022. That sea of red ink made it even less attractive as rising interest rates boosted lending costs for unprofitable companies.

But after that steep decline, C3.ai trades at just six times this year's sales. Three recent developments -- which might be considered green flags -- could also bring some bulls back to this beaten-down stock.

1. C3.ai is expanding its partnership with Google Cloud

Last September, C3.ai partnered with Alphabet's (GOOG 1.06%) (GOOGL 1.08%) Google to co-sell its Enterprise AI applications with Google Cloud plans.

That partnership led to the launch of the C3 AI Supply Chain Suite for Google Cloud in June. This new product leverages Google Cloud's services to create various AI algorithms for resolving the ongoing supply chain crisis. Specifically, it aims to improve on-time deliveries by using C3.ai's algorithms to predict demand, optimize inventories, streamline production, and provide more reliable lead-time estimates.

With this new service, C3.ai should be able to attract the attention of more enterprise customers on Google Cloud, the world's third-largest cloud infrastructure platform. Meanwhile, Google would gain another tool to challenge its two larger rivals -- Amazon Web Services (AWS) and Microsoft Azure.

2. C3.ai lands new HHS contract

In late June, C3.ai and the software firm CITI were awarded a joint five-year contract worth $90 million by the U.S. Department of Health and Human Services (HHS). 

This blanket purchase agreement is aimed at expediting enterprise AI software deployments across the entire HHS, and it will enable HHS officials to install C3.ai's AI apps, access its data collection platform, and analyze data with its predictive machine learning capabilities.

It's unclear how much of that contract C3.ai will actually recognize as revenue, but it could be meaningful -- since it's only expected to generate about $311 million in revenue this year.

3. Another military deal

Last December, C3.ai signed a five-year, $500 million contract with the Department of Defense (DoD) to scale up its AI-powered applications.

In early July the defense giant Raytheon Technologies (RTX -0.06%) chose C3.ai's AI Application Platform to provide AI and machine learning capabilities for the U.S. Army's Tactical Intelligence Targeting Access Node (TITAN), a tactical ground station that tracks aerial and terrestrial threats.

It's unclear how much this contract is worth, but it will likely complement C3.ai's DOD deal and potentially deepen its penetration of the military market.

Will these deals solve C3.ai's biggest problem?

These deals are encouraging, but the real question is if they can meaningfully reduce C3.ai's dependence on the energy giant Baker Hughes (BKR 1.33%).

Baker Hughes is C3.ai's joint venture partner, and it still accounted for 45% of its RPO (remaining performance obligations, or the remaining revenue to be invoiced from its current contracts) at the end of fiscal 2022. The bears often cite that customer concentration, along with the upcoming expiration of Baker's JV deal in April 2024, as bright red flags for its future.

Therefore, investors should consider these new deals to be green flags for C3.ai's future -- but they also need to temper their expectations and see if they actually reduce its dependence on Baker Hughes.