What happened
A new deal signed with an important wing of the U.S. military brought the bulls back into C3.ai (AI -2.47%) stock on Monday. The artificial intelligence (AI) specialist's share price raced 4% higher on this development, a performance that trounced the 0.7% bump of the S&P 500 index on the day.
So what
That morning, C3.ai announced, no doubt with plenty of pride, that it is to provide some of its services to no less a client than the U.S. Air Force. Under the terms of the deal, the military branch will adopt an air logistics-optimization product. The aim is to conserve flight energy.
This arrangement is a new order under a broad deal between the AI specialist and the Air Force's overseer, the Department of Defense (DoD), signed at the end of 2021. The company and the DoD agreed to a five-year "production-other transaction" arrangement covering the provision of C3.ai products and services to agencies and branches under the DoD umbrella. The total value of the contract is $500 million.
In the press release trumpeting the Air Force arrangement, C3.ai quoted CEO Thomas Siebel as saying that
Our work within the DoD has led to significant efficiency and productivity improvements, most recently proven when the Air Force designated a C3 AI application as the system of record for all new predictive maintenance programs across the department.
Now what
One deal does not a successful company make, of course. C3.ai is still a young company with plenty to prove. That being said, it's impressive that management has managed to rope in a government client for which it's providing critical products and services. This augurs very well for the future of its business.
