Nvidia supplies the best data center chips for artificial intelligence (AI) development, and with a market capitalization of $3.6 trillion, it's now one of the largest companies in the world. There is still room for its stock to move higher, but investors who already own it might be looking for other AI names with growth potential.
C3.ai (AI -1.94%) developed a portfolio of over 130 ready-made applications to help businesses accelerate their adoption of AI. Upstart Holdings (UPST 0.13%), on the other hand, created an AI-powered lending algorithm that helps banks assess the creditworthiness of potential borrowers far more effectively than traditional methods.
Both companies have rapidly growing businesses and enormous addressable markets, so here's why it might be a great idea for investors to add C3.ai and Upstart to their portfolios for the long term.
Image source: Getty Images.
The case for C3.ai
Very few companies have the financial resources or the technical expertise to develop AI software from scratch, so they are turning to third-party vendors like C3.ai to meet their needs. C3.ai can deliver a custom AI application to a business customer in as little as three months from the initial project briefing, whether they operate in financial services, retail, manufacturing, oil and gas, or a host of other industries.
C3.ai also stepped into agentic AI recently. It developed a platform that allows businesses to create and deploy virtual assistants into their operations to analyze data, automate workflows, and even influence key decisions. The platform connects to over 200 third-party databases and software applications so businesses can tap into their most valuable data to extract the most out of their AI agents.
Salesforce CEO Mark Benioff says the market for "digital labor" -- or agents -- could be as large as $12 trillion in the future, so C3.ai might be on the cusp of the biggest financial opportunity in its history thanks to its agentic platform.
Businesses can access C3.ai's products through leading cloud providers like Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud. They can scale C3.ai's software using the computing capacity on offer from those cloud providers, so they don't have to bear the enormous cost of maintaining their own infrastructure.
C3.ai is building some serious momentum right now. The company generated a record $389.1 million in revenue during its fiscal 2025 (which ended on April 30), representing an increase of 25% compared to the prior year. That growth rate accelerated for the second straight year.
Shares of C3.ai are down 85% from their record high, which was set during the tech frenzy in 2020. The stock was unquestionably overvalued back then with its price-to-sales (P/S) ratio soaring to around 80, but it has since come down to a more reasonable level of 7.8. In fact, that's a 19% discount to its three-year average of 9.7 (which excludes the expensive 2021 period), so the stock might actually be undervalued now:
AI PS Ratio data by YCharts
The combination of C3.ai's momentum, its sizable market opportunity in areas like agentic AI, and its valuation creates a compelling opportunity for investors.
The case for Upstart
Upstart thinks traditional human-led methods for assessing the creditworthiness of potential borrowers are outdated, partly because they center around Fair Isaac's FICO credit scoring system, which only considers a handful of metrics like a person's outstanding debts and their repayment history.
The company's AI algorithm analyzes over 2,500 data points for every applicant to gain a better understanding of their creditworthiness. In fact, it's currently so good that it approves twice as many loans at a much lower average interest rate compared to traditional assessment methods -- all while maintaining a comparable risk profile. Plus, 92% of Upstart's approvals are now fully automated, so applicants don't have to wait around for lengthy human assessment processes.
Upstart earns a fee each time its platform originates a loan on behalf of its bank partners. The company specializes in unsecured personal loans, but it has a growing presence in car loans and home equity lines of credit (HELOCs). There is still plenty of room for expansion into other segments like business loans, industrial loans, and credit cards over the long term.
CEO Dave Girouard says $25 trillion worth of loans are originated worldwide each year across all segments, creating $1 trillion in fee revenue. He thinks all credit assessment processes will be handled by AI within the next decade, so Upstart is in a great position to capitalize on the enormous opportunity ahead.
During the first quarter of 2025 (ended March 31), Upstart generated $213 million in total revenue, which was a 67% increase from the year-ago period. It was the fastest growth rate in three years, spurred by $2.1 billion in total loan originations, which was an 89% year-over-year jump. According to Wall Street's consensus estimate (provided by Yahoo! Finance), Upstart's annual revenue could top $1 billion in 2025 for the first time in the company's history.
Upstart stock is down 84% from its 2021 peak. Like C3.ai, it was heavily overvalued back then with its P/S ratio surging to almost 50, but it has since come down to a more sustainable level of 8. Given the company's lightning fast revenue growth right now, and the incredible future opportunity in AI-powered loan originations, I think Upstart stock could be a great long-term buy at the current price.
