Where Will C3.ai Stock Be in 5 Years?

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It has been nearly four years since C3.ai (NYSE: AI) went public, and a look at the company’s performance on the stock market since its initial public offering (IPO) doesn’t paint a pretty picture. Its shares have lost 72% of their value since then.

The stock did enjoy a spike in the first half of 2023 when the hype around artificial intelligence (AI) technology was gaining steam, but even those gains have faded. Even 2024 has unfolded in a similar manner for C3.ai investors; after a bright start, the stock lost its momentum and is down 8% this year. That’s in stark contrast to fellow AI software specialist Palantir Technologies, which has witnessed a 162% surge in its stock price this year thanks to the growing demand for its AI software platforms.

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But can C3.ai turn its fortunes around and become a solid investment over the next five years? Let’s find out.

The demand for AI software platforms is expected to grow at an incredible annual rate of almost 41% over the next five years, according to market research firm IDC. More specifically, the size of this market is expected to jump to $153 billion in 2028 as compared to just $28 billion last year. So, the possibility of a turnaround in C3.ai’s fortunes cannot be ruled out considering that the market it serves is currently in the early phases of its growth.

It is worth noting that the stock’s underperformance in recent years is the result of a change in its business model from a subscription-based service to a consumption-oriented one. C3.ai made this change in August 2022, which was the beginning of the second quarter of its fiscal year 2023. As the following chart tells us, the company’s growth took a hit following the change of business model in the second half of 2022.

AI Revenue (TTM) Chart

C3.ai management pointed out at that time that it would take nearly seven quarters for the change of business model to scale up and help the company achieve the revenue growth levels that it was achieving before the transition. The company seems to be walking the talk.

C3.ai released its fiscal 2025 first-quarter results (for the three months ended July 31) in September this year. This was the eighth quarter since the company announced the business model change, and the company reported a 21% year-over-year increase in revenue to $87.2 million. That was an improvement over the 16% revenue growth that the company clocked in fiscal 2024 to $310.6 million.

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