C3.ai (AI 0.34%) stock has plummeted by 36% so far this year despite the broader artificial intelligence (AI) industry producing significant gains. Last September, its founder and longtime CEO Thomas Siebel stepped down to deal with health issues, which led to an unexpected collapse in the company's revenue.
Siebel played an important role in selling C3.ai's software applications, and he was also instrumental in managing relationships with some of the company's most important customers. As a result, several lucrative deals were either lost or delayed when he departed.
But fortunately for shareholders, C3.ai recently announced that Siebel returned to the CEO role on May 8. Could this be the ultimate opportunity to buy C3.ai stock ahead of a potential recovery in the company's operating results?
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An innovative product portfolio
Developing AI software from scratch requires technical expertise and a significant amount of computing capacity, which is delivered via billions of dollars' worth of data center infrastructure. Most businesses don't have those financial or human resources, so they turn to third parties like C3.ai instead. C3.ai built a portfolio of 40 turnkey software applications to accelerate AI adoption for its customers, whether they operate in manufacturing, retail, financial services, or a host of other industries.
As an example, banks and financial institutions can use the C3.ai Anti-Money Laundering application to make their compliance processes more efficient. In one customer case study, the app delivered a 200% increase in the number of correctly identified suspicious transactions and an 85% reduction in false-positive alerts.
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Key Data Points
C3.ai's apps are constantly learning and improving as they receive more real-world data, and they can also be customized to suit any specific requirements a customer may have. Businesses can access the apps directly through their favorite cloud platform, which means they can tap into the computing capacity on offer from the likes of Amazon Web Services or Microsoft Azure to achieve sufficient scale.
Therefore, businesses have everything they need to adopt AI without having to develop any software from scratch or maintain any physical infrastructure themselves.
Siebel's return could reverse C3.ai's financial fortunes
Earlier this month, C3.ai released its preliminary operating results for its fiscal year 2026 (ended April 30). The company delivered $250.3 million in total revenue, which was a 35% decline from the previous year.
Stephen Ehikian, who took over as CEO in Thomas Siebel's absence, worked hard to restructure C3.ai's costs to limit the damage from the sharp drop in revenue. However, he couldn't reduce the company's expenses fast enough to prevent a blowout loss at the bottom line. As a result, C3.ai suffered a net loss of $498 million during fiscal 2026, which was a near-70% increase from its loss in fiscal 2025.
The company ended fiscal 2026 with $575 million in cash and cash equivalents on its balance sheet, so it simply can't afford to lose money at the current pace for much longer without taking on debt or conducting a capital raise, which could dilute existing shareholders.
Aside from cutting costs even further, C3.ai can improve its bottom line by generating more revenue. Siebel's return to the CEO position is very timely from that perspective, because he might be the only person who can spark an immediate uptick in sales. As the founder, his importance to C3.ai is similar to Elon Musk's importance to Tesla or Mark Zuckerberg's importance to Meta Platforms.
C3.ai stock is near the cheapest level in its history
As I mentioned earlier, C3.ai stock is down 36% this year. However, it's also down 94% from its 2020 record high when a frenzy in the technology market drove its price-to-sales (P/S) ratio to around 100. That valuation was entirely unsustainable, but the sharp decline in the stock has since pushed its P/S ratio down to just 3.9, which is near the lowest level since it went public.
AI PS Ratio data by YCharts.
But a beaten-down stock isn't always a cheap stock. If C3.ai's revenue continues to shrink, its P/S ratio will rise even if its stock holds steady, so it might actually be more expensive than it appears at face value right now. It's too early to say how fast Siebel can turn the ship around, but Wall Street's consensus estimate for fiscal 2027 (provided by Yahoo! Finance) points to a further 9% decline in the company's revenue.
As a result, while it's unequivocally positive that C3.ai's founder is back to running the show, investors might want to avoid the stock until the company proves it can return to generating sustainable revenue growth.
