Why C3.ai Could Become One of the Few Pure-Play Ways to Bet on Enterprise Generative AI

C3.ai (NYSE: AI) is set to report fiscal Q2 2026 results after the close on Wednesday, December 3, 2025. Wall Street is currently bracing for a sequential step-down, with consensus calling for revenue of approximately $105–107 million (up ~16% y/y but down from $115 million last quarter) and a wider non-GAAP loss of around –$0.19 per share.

Investors will be listening closely for any signs that the recent re-acceleration in bookings and the generative AI pipeline can offset the usual post-summer seasonality and continued heavy spending on go-to-market and R&D. One quarter of softer headline growth won’t kill the longer-term thesis, but in a name this volatile, it will almost certainly dictate near-term sentiment.

C3.ai has spent years as the perpetual “show-me” story in enterprise AI investors loved to hate: too much oil-and-gas concentration, chronic losses, and a stock that could erase a year’s worth of gains in a single bad quarter.

Lately, though, the picture is changing in ways that even the biggest skeptics are starting to take seriously.Start with the revenue mix. Three years ago, more than 70% of the business came from energy. Today that figure is down to about 18%, replaced by a fast-growing federal segment that now accounts for roughly 45% of bookings.

The latest proof point was a $450 million expansion of the U.S. Air Force contract, pushing the committed federal backlog north of $1.1 billion. These aren’t lumpy pilot projects; they’re multi-year, high-margin subscriptions that buy the company something it has rarely had: visibility.The numbers are finally following the narrative.

In the most recent quarter (Q2 FY25), subscription revenue grew 26% year-over-year, the fastest pace in more than three years. Current remaining performance obligations (the revenue the company is contractually owed over the next twelve months) jumped 71%. Total RPO is up 41% to $1.34 billion, and net revenue retention is climbing back toward the mid-teens.

For a company that spent half a decade stuck in low-teens growth, that feels like an inflection.Under the hood, the new C3 Agentic AI Platform and its growing family of vertical generative AI applications are starting to land real production deals. Industrial customers are using it to let technicians ask plain-English questions of millions of pages of manuals and sensor data.

Government agencies are deploying it for instant, on-brand constituent responses. Banks and PE firms are slashing due-diligence cycles. Even corporate websites can now be flipped into fully conversational agents that read every PDF and video on the site.

All of this is co-sold through newly expanded partnerships with Microsoft Azure, AWS, and Google Cloud, giving C3 preferred shelf space with the three clouds that control enterprise budgets.Valuation reflects the momentum but still leaves room. At roughly 9.2× next-twelve-months revenue and 7.4× calendar-2026 estimates, the stock trades at about half of Palantir’s multiple despite similar (or slightly higher) expected growth rates over the next couple of years.

None of this means the risk has disappeared. C3.ai has never posted a GAAP-profit quarter in its decade-plus history, and it is still burning $50–80 million of cash a year. The top five customers remain more than half the revenue base. Federal spending can always be held hostage by continuing resolutions or a surprise shutdown.

Competition is brutal: Palantir, ServiceNow, Salesforce, and the hyperscalers themselves are all chasing the same dollars, and many CIOs are still tempted to build in-house with open-source tools. A single embarrassing hallucination in a defense deployment could stall the whole story overnight.So the setup is genuinely asymmetric, but it’s not a layup.

The bull case, 30–35% revenue CAGR and mid-20s adjusted operating margins by 2028, could easily take the market cap toward $20–30 billion.

The bear case, growth slipping back to the teens and margins stalling, could send the multiple crashing to 5–6× sales and the stock back toward 2024 lows.After years of promising the AI future and delivering mostly disappointment, C3.ai finally has the right products, the right distribution, and a dramatically de-risked revenue base all moving in the same direction at the same time.

For aggressive growth investors comfortable with 50% drawdowns, it’s one of the more compelling pure-play ways to own the enterprise generative AI wave. For everyone else, it’s still a name that has to keep proving it quarter after quarter.The stock has already doubled from its lows, but if the inflection is real, the easy money might still be ahead.

Disclaimer: This news feature is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult with a qualified financial professional before making investment decisions.

Naorem Mohen

Naorem Mohen is the Editor of Signpost News. Explore his views and opinion on X: @laimacha.