Latest news with #C3.ai
Yahoo
6 hours ago
- Business
- Yahoo
Prediction: Buying This AI Stock Will Not Look Smart in 5 Years
is growing its revenue at a decent rate, but it's not scaling its business with any efficiency. It is growing slower than its AI peers and is posting huge operating losses. The stock trades at an expensive valuation. 10 stocks we like better than › Just about every stock with some connection to artificial intelligence (AI) has seen its price soar in the past couple of years. Ever stock, that is, except (NYSE: AI), that is. The AI-focused company with the ticker "AI" is trading down around 22% over the past year and around 86% from all-time highs as the company struggles to grow and get anywhere close to generating a profit. This AI company has a lot of hype around it, and even brags about huge wins with partnerships with other AI players. A lot of this is all bark and no bite. Here's why investors will be disappointed with the results of stock compared to other AI-associated investments over the next five years. has been a trendy name in the AI space for years. The company brands itself as the AI enterprise software company, deploying software solutions including its new agentic AI platform and generative AI tools. It has large customers, including energy giants and the U.S. Air Force, implementing its software in operations. This all sounds fine and dandy, but it oversells as a company with actual software products. Similar to a consultant, has a large sales team that wins contracts to build custom software solutions for companies, which is different than a software provider that builds once and ships as many times as it can, such as Microsoft. It is a much more difficult business model, and one that is harder to scale with large profit margins. generated only $389 million in revenue over the last 12 months, even though the AI sector is in the middle of one of the largest spending booms ever. Compare that to its quasi-competitor, Palantir Technologies. The company generated $3.11 billion in revenue over the last 12 months and is growing revenue much faster than Last quarter, revenue grew 26% year over year compared to 39% for Palantir. One could argue, looking at the metrics referenced above, that is in fine shape as a business. It is growing revenue at over 20% year over year and has long-term software consultant contracts with big enterprises. But those strong top-line metrics aren't making it down to the company's bottom-line profit and loss metrics, which keep moving in the wrong direction. This is an indicator that the company has a bloated expense structure and will struggle to scale due to the custom-built software it deploys. Last fiscal year, had an operating loss of $324 million on $389 million in revenue. It spent $231 million on stock-based compensation -- a noncash dilutive expense -- which is around 60% of its overall revenue. This is an unsustainable figure and needs to be dramatically reduced in order for to generate a profit. Spending 10% of revenue on stock-based compensation can be a concern for investors when analyzing a stock, but 60% is unheard of. It is no surprise then why stock is down. It has to spend a boatload every year to retain its research, sales, and operational staff that deploy these consultant contracts with large enterprises, and these costs are simply outweighing any revenue earned by these contracts, making persistently unprofitable. Two main reasons stand out to me as to why stock will struggle to generate a positive return for shareholders over the next five years. First, the services it provides do not look scalable due to the custom-build process and heavy losses it is sustaining. In fact, it looks like the company has the opposite of operating leverage, as its operating loss has gotten worse and worse since going public around five years ago, even though revenue is growing. Second, stock trades at a high valuation. It has a price-to-sales (P/S) ratio of 8.5, which is much higher than the S&P 500 average. This is for a company with deeply negative operating margins and no history of profitability. Yes, revenue is growing at a decent clip, but the company is showing zero signs of operating leverage. In fact, one might argue that growing revenue is a bad thing for as historically, all growing revenue has done is lead to larger operating losses. A high valuation, huge losses, and slower revenue growth than its AI peers make a bad stock to own right now. Avoid buying it for your portfolio despite the AI hype in the markets today. Before you buy stock in consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $888,780!* Now, it's worth noting Stock Advisor's total average return is 999% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Palantir Technologies. The Motley Fool recommends and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Prediction: Buying This AI Stock Will Not Look Smart in 5 Years was originally published by The Motley Fool
Yahoo
a day ago
- Business
- Yahoo
1 Software Stock with Competitive Advantages and 2 to Approach with Caution
From commerce to culture, software is digitizing every aspect of our lives. In the past, the undeniable tailwinds fueling SaaS companies led to lofty valuation multiples that made it easier to raise capital. But this was a double-edged sword as the high prices exposed them to big drawdowns, and unfortunately, the industry has tumbled by 8.8% over the last six months. This drop was disheartening since the S&P 500 stood firm. Investors should tread carefully as only some businesses are worthy of their valuations, and luckily for you, we started StockStory to help you find them. On that note, here is one resilient software stock at the top of our wish list and two we're swiping left on. Market Cap: $3.23 billion Founded in 2009 by enterprise software veteran Tom Seibel, (NYSE:AI) provides software that makes it easy for organizations to add artificial intelligence technology to their applications. Why Are We Wary of AI? Annual revenue growth of 15.5% over the last three years was below our standards for the software sector Extended payback periods on sales investments suggest the company's platform isn't resonating enough to drive efficient sales conversions Poor expense management has led to operating margin losses At $24.25 per share, trades at 7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than AI. Market Cap: $1.52 billion Founded in 2000 with the idea that network security comes before endpoint security, Rapid7 (NASDAQ:RPD) provides software as a service that helps companies understand where they are exposed to cyber security risks, quickly detect breaches and respond to them. Why Are We Out on RPD? Offerings struggled to generate meaningful interest as its average billings growth of 4.6% over the last year did not impress Estimated sales growth of 2.1% for the next 12 months implies demand will slow from its three-year trend Projected 2.5 percentage point decline in its free cash flow margin next year reflects the company's plans to increase its investments to defend its market position Rapid7 is trading at $23.73 per share, or 1.8x forward price-to-sales. To fully understand why you should be careful with RPD, check out our full research report (it's free). Market Cap: $63.88 billion Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies. Why Does ADSK Stand Out? Billings growth has averaged 23.1% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases Software is difficult to replicate at scale and leads to a best-in-class gross margin of 92% Excellent operating margin of 20.3% highlights the efficiency of its business model Autodesk's stock price of $297.02 implies a valuation ratio of 9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
Yahoo
2 days ago
- Business
- Yahoo
What's the Better Artificial Intelligence Stock to Buy: C3.ai or BigBear.ai?
and are artificial intelligence companies that provide solutions for multiple industries. They are smaller artificial intelligence plays, and they have attracted the interest of retail investors. These stocks come with risks, as their young businesses are burning through cash and are unprofitable. 10 stocks we like better than › There are mammoth opportunities in artificial intelligence (AI) for growth investors to consider. AI has the potential to revolutionize companies in multiple industries by making operations more efficient and taking over and/or eliminating mundane and routine tasks along the way. The big challenge, of course, is picking the right AI stock. There are many companies out there that are involved in AI, but that doesn't necessarily mean they will be winners in the space. This article focuses on two popular AI stocks with retail investors: (NYSE: AI) and (NYSE: BBAI). Both of these stocks come with risks and opportunities. If you are interested in an AI stock, which one is the better option to consider adding to your portfolio today? Both and provide AI-powered solutions for their customers. The problem is that many other companies do this too. The challenge is in determining which companies are good, growing businesses. Their financial metrics can help answer the question. Over the past three years, has generated more consistently strong growth. What's encouraging is that it has been accelerating growth, which suggests it is benefiting from AI's overall growth. however, saw more volatility in its growth. And while management touts a strong backlog, that doesn't guarantee all of that will flow through to the company's top line anytime soon -- a big chunk of the backlog includes unexercised options. A key metric growth investors should consider is operating cash flow. For companies such as and which aren't profitable, it's important to see how much cash they are burning through. A high cash burn rate combined with a low cash balance can result in frequent stock offerings, leading to share dilution for existing shareholders. has come a long way in improving its rate of cash burn, but it is still a bit worse than BigBear's. However, it's also important to consider this in the context of their respective cash positions as well, to see how long they can sustain this level of cash burn before having to raise money. As of the end of March, BigBear's cash and cash equivalents totaled $107.6 million, which would mean that at its current burn rate of more than $30 million over four quarters, that should keep it well funded for multiple years. cash and cash equivalents as of the end of April totaled $164.4 million. And if you count its marketable securities of $578.3 million, that gives it $742.7 million in near-term liquidity. Although its cash burn is slightly higher than BigBear's, its stronger cash balance means that it can sustain its current burn rate even longer. That doesn't, of course, mean the burn rate won't intensify or that won't do an offering anytime soon, but the numbers do show that it is in a stronger financial position than If you're choosing between these two stocks, these metrics suggest is the safer and more promising one to invest in right now. Its growth rate is stronger, and its cash position is also better. While I wouldn't go as far as to say that it's a safe stock to buy (it is, after all, still unprofitable and burning through cash), if you are picking between these two stocks, looks to be the better option right now. Before you buy stock in consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor's total average return is 996% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends The Motley Fool has a disclosure policy. What's the Better Artificial Intelligence Stock to Buy: or was originally published by The Motley Fool
Yahoo
3 days ago
- Business
- Yahoo
Is C3.ai's Federal Business the Key to Unlocking Consistent Growth?
Inc.'s AI federal business is turning out to be one of the major growth engines amid the broader push to diversify its customer base. In fourth-quarter fiscal 2025, witnessed a major momentum in its government partnerships, headlined by a new $450 million ceiling awarded by the U.S. Air Force for the PANDA predictive maintenance platform. This system, already monitoring a wide range of aircraft, now enters a new expansion phase, reinforcing embedded value in critical national defense infrastructure. What makes the federal business so compelling is its multi-agency traction. AI-powered solutions are now integrated across the Air Force, Navy, Marine Corps and Missile Defense Agency. From supply-chain visibility in fuel logistics to predictive analytics for aircraft readiness, agentic AI and generative platforms are delivering real-time operational advantages. Importantly, this federal momentum aligns with the company's broader goal, building a stable, high-margin, recurring revenue base. While the commercial sector remains volatile, federal contracts tend to be long-term and resistant to cyclical downturns, exactly what needs to balance its startup-style volatility elsewhere. With $742.7 million in cash and a stable outlook on profitability, is laying the foundation for long-term resilience. The question is not whether the federal business is a growth lever, it already is. The real focus now is scale. If can deepen these relationships and expand AI solutions across more defense and intelligence domains, the federal sector may become the cornerstone of its growth strategy. AI's shares have gained 18.5% in the past three months compared with the industry's growth of 5%. In the same time frame, other industry players, such as Asana, Inc. ASAN and Braze, Inc. BRZE, have seen their stocks gain 7% and decline 18.2%, respectively. Image Source: Zacks Investment Research Despite the recent gain, AI is priced at a discount relative to its industry. It has a forward 12-month price-to-sales ratio of 7.14, which is well below the industry average. Meanwhile, Asana and Braze's forward 12-month price-to-sales ratios are 4.14 and 4.18, respectively. Image Source: Zacks Investment Research The Zacks Consensus Estimate for fiscal 2026 loss per share has narrowed to 36 cents (compared with a loss of 46 cents a year ago) in the past 30 days. Moreover, the consensus mark for fiscal 2027 loss per share has narrowed to 12 cents from a loss of 42 cents in the same time frame. Meanwhile, Asana and Braze's earnings in fiscal 2026 are likely to witness an increase of 269.2% and 88.2%, respectively. Image Source: Zacks Investment Research The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AI) : Free Stock Analysis Report Asana, Inc. (ASAN) : Free Stock Analysis Report Braze, Inc. (BRZE) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
06-06-2025
- Business
- Yahoo
Better AI Stock: C3.ai vs. Palantir
is overcoming some of its biggest near-term challenges. Palantir's growth rates are impressive, but its valuations could be unsustainable. 10 stocks we like better than › (NYSE: AI) and Palantir (NASDAQ: PLTR) represent two different ways to invest in the booming artificial intelligence (AI) market. develops data-ingesting AI modules that can be plugged into an organization's existing infrastructure or run as standalone services. Palantir operates two main platforms -- Gotham for its government clients and Foundry for its commercial clients -- that gather data from disparate sources to spot trends and predict future challenges. went public at $42 via a traditional initial public offering (IPO) in December 2020, but it now trades at about $25. It lost its luster as its growth slowed down, it racked up steep losses, and investors fretted over its customer concentration issues. Palantir went public through a direct listing in September 2020, and its stock started trading at $10. Today, it trades at more than $130. The bulls embraced Palantir as it grew rapidly, its profits soared, and it joined the S&P 500 and Nasdaq-100. So is Palantir still a better AI play than right now? AI modules can be installed as on-premises software or via hybrid cloud deployments and public cloud infrastructure platforms to automate and accelerate custom tasks. It originally only provided subscription-based services, but in late 2022, it rolled out a consumption-based fee option to attract more customers. In its fiscal 2023 (which ended in April 2023), revenue only rose 6% as macroeconomic headwinds drove many of its customers to rein in their spending, it faced tougher competition, and its consumption-based option cannibalized its subscription sales. It also faced the looming expiration at the end of its fiscal 2025 of a joint venture with Baker Hughes that accounted for more than 30% of its revenue. Those challenges, along with a declining gross margin and ongoing losses, spooked investors. However, revenue rose 16% in its fiscal 2024 and grew by 25% in its fiscal 2025. That acceleration was driven by its new generative AI modules; its strategic partnerships with Microsoft, Amazon, and McKinsey; and fresh federal contracts. It expects its revenue to rise by 15% to 25% in fiscal 2026, while analysts on average anticipate 20% growth. also recently renewed its joint venture with Baker Hughes for another three years. That extension should buy it more time to further diversify its customer base. But it's still expected to stay unprofitable for the foreseeable future -- and it isn't a screaming bargain at 8 times this year's expected sales. So while some green shoots are finally appearing, stock probably won't rebound to its IPO price until it meaningfully widens its moat and narrows its losses. Palantir initially only provided its data analytics services to U.S. government agencies and the Defense Department, but it has since leveraged its battle-hardened reputation to lock in more commercial customers. Its revenue rose by 17% in 2023, but that was a deceleration from its 24% growth in 2022. It also broadly missed its original goal of growing its revenue by at least 30% annually through 2025. That slowdown, which was mainly caused by the challenging macro environment and the uneven timing of when it booked revenues from its government contracts, drove away a lot of its initial investors. But in 2023, it turned profitable for the first time as it reined in its spending and stock-based compensation. In 2024, Palantir's revenue rose by 29% and its earnings per share (EPS) more than doubled. That acceleration was driven by the expansion of its U.S. commercial business, which recovered for several reasons: The Federal Reserve brought interest rates back down a bit from the levels it raised them to in its battle with inflation; businesses adopted Palantir's AI tools in growing numbers to creating customized applications; and intensifying geopolitical conflicts drove the U.S. government to grant the company new contracts. This year, management expects its revenue to rise 31% and sees the company staying firmly profitable. From 2024 to 2027, analysts on average expect Palantir's revenue and EPS to grow at compound annual rates of 32% and 50%, respectively. That's an impressive growth trajectory, but its stock looks extremely expensive at 392 times this year's expected earnings and 80 times this year's expected sales. Those valuations suggest it's more of a meme stock than a growth stock. Any bad news (like a slowdown in U.S. government spending or a surprise earnings miss) could abruptly sink it. Both of these stocks are tough to recommend right now. But if I had to choose one over the other, I'd suggest nibbling on instead of Palantir. Palantir runs a tighter and more profitable ship than but it's simply too overvalued to consider buying. is still a speculative play, but it's overcoming some of its biggest issues. If it diversifies its customer base and narrows its losses, it could finally attract a lot more investors. Before you buy stock in consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and Palantir Technologies. The Motley Fool recommends and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Better AI Stock: vs. Palantir was originally published by The Motley Fool Sign in to access your portfolio
