Key Points
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C3.ai had terrible earnings last quarter.
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The business is losing money as revenue collapses.
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Compared to a competitor like Palantir, C3.ai is losing the race in the enterprise AI market.
- 10 stocks we like better than C3.ai ›
Shares of C3.ai (NYSE: AI) fell an astonishing 27.8% in February, according to data from S&P Global Market Intelligence. A company that markets itself as an enterprise artificial intelligence (AI) operator, the business is clearly not benefiting from the AI revolution so far, as revenue has begun to move in the wrong direction, alongside terrible profit margins. The stock is down over 90% from its highs set right after it went public in late 2020.
Here’s why the stock was falling in February, and whether you should finally buy the dip on C3.ai stock for your portfolio.
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Collapsing revenue, huge cash burn
Management pitches C3.ai as a similar player to Palantir Technologies, selling custom AI services to enterprises to help them become better at what they do. The problem is, it doesn’t seem to be very good at it.
Revenue was a measly $53 million last quarter, down from $99 million in the same period a year ago. We are supposedly in a revolution of AI applications taking over the world, and yet C3.ai’s revenue has almost been cut in half compared to a year prior. This shows that customers are not taking to its custom software products, leading to contract non-renewals.
The company is unsurprisingly highly unprofitable. Operating loss was $140 million last quarter, more than double topline revenue. Free cash flow was negative $126 million over the last twelve months, which is going to eat into cash reserves on the balance sheet.
Image source: Getty Images.
Should you buy the dip?
A true AI company like Palantir can grow while generating solid profits. Its revenue was $4.47 billion in 2025, along with over $2 billion in free cash flow. As a primary competitor to C3.ai, there is a huge disparity between these two businesses and how they are attacking the enterprise AI market.
Now, C3.ai trades at a lower-looking price-to-sales ratio (P/S) of 4, its lowest level in history. However, a company that keeps losing money with declining revenue is never going to be worth anything, no matter how low the stock falls. This should keep any investor away from this stock, even after its 28% collapse last month.
Look for better AI stocks to buy for your portfolio right now. C3.ai is not worth buying the dip on.
Should you buy stock in C3.ai right now?
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
