C3.ai (AI 1.06%) was once a hot artificial intelligence (AI) stock. Back in December 2020, it more than quadrupled from its initial public offering (IPO) price of $42 to a record high of $177.47 in just two weeks. At the time, investors were impressed by its rapid growth rates, catchy ticker symbol, and the fact that it was led by Tom Siebel, who sold his previous company -- Siebel Systems -- to Oracle for $5.8 billion in 2006. The buying frenzy in meme and growth stocks amplified those monstrous gains.
But today, C3.ai's stock trades at about $26. It fizzled out as its growth cooled off, it racked up steep losses, and rising interest rates popped its bubbly valuations. It hasn't traded above its IPO price since last December, and it's declined roughly 12% over the past 12 months. Let's see where it might be headed over the next year.

Image source: Getty Images.
How does C3.ai make money?
C3.ai's AI modules can be plugged into an organization's existing software infrastructure to ingest and analyze a wide range of data. Those modules can also be run as stand-alone services. Its modules are often used to detect safety issues, fraudulent transactions, and operating inefficiencies. It mainly serves government clients and large enterprise customers across the energy, industrial, and financial sectors, and its top customer is the energy technology giant Baker Hughes.
C3.ai initially only offered subscriptions, but it rolled out consumption-based fees in late 2022 to attract more customers as rising interest rates stirred up some fierce macro headwinds. That move reduced its recurring revenues and the stickiness of its ecosystem, but it broadened its market by reaching smaller and more budget-conscious customers.
Why were its last few years challenging?
In fiscal 2023 (which ended in April 2023), C3.ai's revenue only rose 6% as the competitive headwinds, a challenging macro environment, and the cannibalization of its subscriptions with its consumption-based fees throttled its growth. Its adjusted gross margin also dipped 2 percentage points to 77% as its pricing power waned.
However, C3.ai's revenue rose 16% in fiscal 2024 and 25% in fiscal 2025. That acceleration was driven by its new federal contracts; fresh partnerships with Microsoft, Amazon Web Services (AWS), and McKinsey; and its rollout of more modules for generative AI applications.
Its adjusted gross margin dropped another 8 percentage points to 69% in fiscal 2024 as it relied on more low-margin pilot trials to attract more customers. But in fiscal 2025, that figure expanded to 70% as it converted more of those pilot programs into full-priced deployments. It also expanded its higher-margin subscriptions again.
What happened to C3.ai over the past year?
Over the past year, C3.ai's year-over-year revenue growth stabilized above 20% as its adjusted gross margins improved. That recovery was driven by declining interest rates, the growth of the AI market, and its broadening customer base.
Metric |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
Q4 2025 |
---|---|---|---|---|---|
Revenue growth (YOY) |
20% |
21% |
29% |
26% |
26% |
Adjusted gross margin |
69% |
68% |
70% |
70% |
71% |
Data source: C3.ai. YOY = year over year.
More importantly, C3.ai renewed its joint venture with Baker Hughes, which accounted for more than 30% of its revenue, for an additional three years. That renewal allayed some bearish concerns about C3.ai abruptly losing its top client before it could diversify its customer base.
What will happen over the next year?
C3.ai expects its revenue to rise 15%-25% in both the first quarter of fiscal 2026 and the full year. Analysts expect its revenue to increase 20% to $465 million for the full year. With a market cap of $3.5 billion, C3.ai's stock doesn't seem that expensive at 8 times this year's sales. But it isn't expected to break even anytime soon. At the beginning of fiscal 2024, it abandoned its near-term goal of turning profitable on an adjusted basis by the end of the year in favor of ramping up its investments in its AI-oriented modules.
For fiscal 2026, C3.ai expects to post an adjusted operating loss of $65 million-$100 million. That wouldn't be much of an improvement from its adjusted operating loss of $88 million in fiscal 2025. It will also likely continue to spend a lot of cash on its stock-based compensation expenses, which rose 7% to $231 million in fiscal 2025 and consumed 59% of its revenue. On a generally accepted accounting principles (GAAP) basis, analysts expect its net loss to widen from $288 million in fiscal 2025 to $302 million in fiscal 2026.
For fiscal 2027, analysts expect its revenue to rise 19%. Assuming it meets those expectations and still trades at 8 times its forward sales, its stock price could rise about 26% to $33 over the next 12 months. That would be a decent gain, but it would remain far below its IPO price and likely underperform some of the market's higher-growth AI plays.