C3.ai simply posted quarterly outcomes that ought to have Palantir buyers cheering.
Again in January, I wrote an article that posed an easy query: May synthetic intelligence (AI) software program vendor C3.ai (AI 0.78%) emerge because the Palantir Applied sciences (PLTR -2.04%) of 2025?
Quick-forward to Sept. 4, and the market has delivered a transparent verdict. Palantir inventory has surged 105% to this point this 12 months. Against this, shares of C3.ai have plummeted by 54% and are hovering round a multiyear low. So the reply to my earlier query seems to be a decisive “no.”
However simply when sentiment round C3.ai appeared prefer it could not deteriorate additional, the corporate delivered one other spherical of unsettling information for shareholders. And in the end, C3.ai’s weak point represents a major win for Palantir buyers.
C3.ai is a enterprise in decline
Again in Could, C3.ai launched its last set of outcomes for its fiscal 2025 (which ended April 30). At the moment, it issued monetary steering for each the primary quarter of its fiscal 2026 and the total 12 months.
The desk under outlines the corporate’s beforehand issued steering in comparison with its precise reported efficiency.
Metric
Fiscal 2026 Q1 Steering
Fiscal 2026 Q1 Precise
Complete income
$100 million to $109 million
$70.3 million
Revenue from operations (non-GAAP)
($23.5 million to $33.5 million)
($57.8 million)
Information supply: Investor relations.
On income, C3.ai fell wanting the midpoint of its steering vary by greater than 30%, and its working loss was almost twice as unhealthy because the pessimistic finish of administration’s forecast. Compounding the frustration, gross sales not solely declined sequentially (quarter over quarter), however have been additionally decrease than in the identical interval of the prior fiscal 12 months.
In mild of that underperformance, administration withdrew its prior full-year steering and didn’t present a brand new outlook, leaving buyers with out clear expectations for C3.ai’s income or profitability.
This solely indicators heightened uncertainty across the firm’s outlook, but in addition erodes administration’s credibility at a time when confidence is already fragile.
Picture supply: Getty Photographs.
Its troubles are implausible information for Palantir buyers
One frequent criticism leveled towards each Palantir and C3.ai is that they’re overly depending on a small variety of purchasers. To their credit score, each firms have labored to develop their buyer and income bases additional.
C3.ai’s gross sales combine has shifted meaningfully over the previous couple of years. Again in March 2023, almost 72% of its bookings got here from firms within the oil and pure gasoline area, with one other 16% tied to federal, aerospace, and protection prospects.
Extra lately, the corporate has begun to diversify: Manufacturing, utilities, chemical compounds, and healthcare now symbolize rising parts of the portfolio. On the identical time, C3.ai continues to carry a notable presence within the public sector — with 32% of first-quarter bookings coming from state and native governments, in addition to aerospace and protection.
Palantir has undergone an identical evolution in its buyer combine, however the distinction lies within the sheer scale and strategic significance of its contracts. The corporate, which obtained its begin serving authorities businesses, has established a observe file of securing high-profile contracts that affirm its standing as an indispensable associate throughout each private and non-private markets.
- Protection and authorities: In Could, Palantir’s Maven Good System contract was expanded by $795 million — bringing the entire worth to $1.28 billion. Extra lately, the U.S. Military consolidated 75 separate agreements with the corporate right into a single contract price as much as $10 billion over the subsequent decade. Past home authorities businesses, Palantir has prolonged its attain to worldwide alliances — most notably, a take care of NATO.
- Industrial enlargement: On the enterprise aspect, Palantir works with main names in aviation comparable to Archer Aviation and American Airways.
- Strategic partnerships: Palantir has additionally cultivated an ecosystem of alliances with world know-how and consulting leaders, together with Oracle, Accenture, Amazon Internet Providers (AWS), Booz Allen Hamilton, PwC, Microsoft, KPMG, Databricks, and Deloitte.
These partnerships not solely develop Palantir’s distribution channels, but in addition reinforce its place as a core layer throughout the enterprise AI software program stack.
Against this, whereas C3.ai has established partnerships and secured contracts of its personal, they are usually narrower in scope and carry much less strategic weight. Palantir continues to seize the flagship alternatives, leaving C3.ai competing for smaller, much less influential offers. This dynamic positions Palantir because the default alternative for high-stakes deployments, whereas C3.ai stays a secondary choice.
Is Palantir inventory a purchase proper now?
Under, I’ve benchmarked Palantir towards two friends which can be competing with it for market share on the intersection of AI and public-private deployments.
PLTR PS Ratio information by YCharts.
Palantir’s price-to-sales ratio of 114 is undeniably elevated — even when considered towards the backdrop of prior market bubbles. Nonetheless, the disparity in valuation multiples between Palantir and its cohorts — C3.ai and BigBear.ai — shouldn’t be misinterpreted.
C3.ai could seem like a discount on the floor, nevertheless it’s a basic worth lure: The enterprise is in structural decline and steadily ceding floor to its bigger rival.
With C3.ai inventory turning right into a falling knife, development buyers could be much better served to carry shares of a longtime chief like Palantir, which continues to solidify its long-term relevancy throughout authorities and business markets.
Adam Spatacco has positions in Amazon, Microsoft, and Palantir Applied sciences. The Motley Idiot has positions in and recommends Accenture Plc, Amazon, Microsoft, Oracle, and Palantir Applied sciences. The Motley Idiot recommends Booz Allen Hamilton and C3.ai and recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
