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In the last reported quarter, C3.ai’s top and bottom lines surpassed the Zacks Consensus Estimate by 0.4% and 20%, respectively. The company delivered strong fourth-quarter fiscal 2025 results, with revenue up 26% year over year to $108.7 million and subscription revenue up 9% to $87.3 million. Gross margin was 69%, operating loss narrowed to $31.2 million, and free cash flow turned positive at $10.3 million, supported by $742.7 million in cash. The quarter was marked by the renewal of the Baker Hughes (BKR - Free Report) partnership, surging bookings, expansion beyond oil and gas into manufacturing, government, and life sciences, and strong momentum in federal contracts and generative AI deployments.
The Microsoft alliance led to 28 new deals and access to more than 600 joint accounts, with Azure reps actively selling C3.ai’s AI apps. Amazon's (AMZN - Free Report) AWS and Google Cloud broadened their global reach, while new partnerships with PwC and McKinsey QuantumBlack expanded into financial services, manufacturing, and transformation consulting. Federal-focused partners like Booz Allen and Arcfield also bolstered defense traction. Collectively, these alliances drove more than 70% of annual agreements and sharply accelerated bookings.
This enterprise artificial intelligence (“AI”) software company surpassed earnings estimates in all the trailing four quarters, with an average surprise of 49%. You can see the historical figures in the chart below.
Image Source: Zacks Investment Research
How Are Estimates Placed for C3.ai Stock?
The Zacks Consensus Estimate for the fiscal first-quarter bottom line has widened to 38 38-cent loss per share from 16 cents over the past 30 days. The estimated figure indicates a wider loss compared to the year-ago loss of 5 cents per share.
The consensus mark for revenues is pinned at $70.3 million, suggesting a 19.4% year-over-year decline.
For fiscal 2026, AI is expected to witness 2.5% revenue growth from the fiscal 2025 level. The company is expected to register a wider loss of $1.39 per share compared with 41 cents of loss a year ago.
Image Source: Zacks Investment Research
Factors Influencing C3.ai’s Fiscal Q1 Performance
Preliminary figures released in early August suggest a steep sequential revenue drop and elevated losses, underscoring the tension between robust long-term opportunity and near-term financial strain. In August, management revealed preliminary first-quarter fiscal 2026 revenues of only about $70.2-$70.4 million, which is down about 19% from $87.2 million a year earlier and drastically below the $100-$109 million range they had guided for that quarter in May. GAAP operating loss is estimated to be in the range of $124.7 million-$124.9 million, while the non-GAAP operating loss is predicted to be between $57.7 million and $57.9 million.
This contraction raises questions about the timing of deal closures, the sustainability of demonstration-license revenue, and whether partner-driven bookings can convert to recurring subscription growth at the expected pace.
Despite the rough preliminary first-quarter fiscal 2026 report, there are several underlying positives that may have helped C3.ai to offset the negatives. C3.ai’s diversified growth beyond Oil & Gas might have helped the company to some extent. C3.ai entered fiscal 2026 with momentum from fiscal 2025, where revenue grew 25% year over year and non-oil and gas verticals surged 48%. Manufacturing, state and local government, and life sciences became meaningful contributors, with new logos such as U.S. Steel, Rolls Royce, and Bristol-Myers Squibb augmenting established relationships. This broadening mix reduces dependence on legacy energy contracts and supports a more balanced revenue base.
Another important factor is C3.ai’s strengthening of its partner ecosystem. A key tailwind is the deepening of cloud and consulting alliances. In the fourth quarter of fiscal 2025, 73% of agreements involved partners, with bookings through the channel up more than 400%. Collaborations with Microsoft (MSFT - Free Report) , Amazon’s AWS, Google Cloud, and newer entrants like PwC and McKinsey QuantumBlack extend C3.ai’s reach across geographies and industries. The strategy of selling via partner paper also shortens sales cycles by leveraging existing master agreements, a structural advantage in the adoption of enterprise AI.
The company has established strong traction in the public sector. Additional wins with the Defense Logistics Agency and the intelligence community position C3.ai to benefit from durable government funding streams. These deals, often multi-year in nature, provide visibility that can help offset volatility in commercial cycles.
Again, despite losses, C3.ai maintains a sizable liquidity position. Cash and equivalents stood at $711.9 million at the end of the fiscal first quarter (per the preliminary report), only modestly down from the $743 million reported in April. This buffer gives management flexibility to continue investing in product development, go-to-market, and partner enablement while targeting eventual non-GAAP profitability in fiscal 2027.
What the Zacks Model Unveils for C3.ai
Our proven model does not conclusively predict an earnings beat for C3.ai this reporting cycle. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: AI has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
In terms of C3.ai’s share price performance, its shares have lost 34.1% in the past three months. AI stock has underperformed the Zacks Computer & Technology sector and the Zacks Computers - IT Services industry, as shown below.
At its current price, the AI stock represents a 62.5% discount from its 52-week high of $45.08. It also indicates a 15% premium to its 52-week low of $14.70.
C3.ai Share Price Performance
Image Source: Zacks Investment Research
C3.ai Stock’s Valuation
In terms of the forward 12-month price/sales (P/S), C3.ai shares are currently trading at a discount to its industry.
AI’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Why You Should Sell AI Stock Now?
C3.ai still has positives like strong partners, new customers outside of oil and gas, and plenty of cash on hand. But the near-term picture looks weak. The company’s early numbers for the first quarter of fiscal 2026 show revenue dropping almost 20% year over year and coming in far below guidance, while losses are widening faster than expected. This raises concerns about how quickly C3.ai can turn its pipeline of deals into steady subscription growth.
The stock has already lost more than 30% in the past three months and even though the valuation looks cheaper compared with peers, that alone is not enough to outweigh the company’s execution problems and lack of near-term profitability. Until C3.ai proves it can deliver consistent growth and narrow its losses, investors should consider selling the stock.
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C3.ai Before Q1 Earnings Release: Buy, Sell or Hold the Stock?
Key Takeaways
C3.ai, Inc. (AI - Free Report) is scheduled to report its first-quarter of fiscal 2026 results on Sept. 3, after the closing bell.
In the last reported quarter, C3.ai’s top and bottom lines surpassed the Zacks Consensus Estimate by 0.4% and 20%, respectively. The company delivered strong fourth-quarter fiscal 2025 results, with revenue up 26% year over year to $108.7 million and subscription revenue up 9% to $87.3 million. Gross margin was 69%, operating loss narrowed to $31.2 million, and free cash flow turned positive at $10.3 million, supported by $742.7 million in cash. The quarter was marked by the renewal of the Baker Hughes (BKR - Free Report) partnership, surging bookings, expansion beyond oil and gas into manufacturing, government, and life sciences, and strong momentum in federal contracts and generative AI deployments.
The Microsoft alliance led to 28 new deals and access to more than 600 joint accounts, with Azure reps actively selling C3.ai’s AI apps. Amazon's (AMZN - Free Report) AWS and Google Cloud broadened their global reach, while new partnerships with PwC and McKinsey QuantumBlack expanded into financial services, manufacturing, and transformation consulting. Federal-focused partners like Booz Allen and Arcfield also bolstered defense traction. Collectively, these alliances drove more than 70% of annual agreements and sharply accelerated bookings.
This enterprise artificial intelligence (“AI”) software company surpassed earnings estimates in all the trailing four quarters, with an average surprise of 49%. You can see the historical figures in the chart below.
Image Source: Zacks Investment Research
How Are Estimates Placed for C3.ai Stock?
The Zacks Consensus Estimate for the fiscal first-quarter bottom line has widened to 38 38-cent loss per share from 16 cents over the past 30 days. The estimated figure indicates a wider loss compared to the year-ago loss of 5 cents per share.
The consensus mark for revenues is pinned at $70.3 million, suggesting a 19.4% year-over-year decline.
For fiscal 2026, AI is expected to witness 2.5% revenue growth from the fiscal 2025 level. The company is expected to register a wider loss of $1.39 per share compared with 41 cents of loss a year ago.
Image Source: Zacks Investment Research
Factors Influencing C3.ai’s Fiscal Q1 Performance
Preliminary figures released in early August suggest a steep sequential revenue drop and elevated losses, underscoring the tension between robust long-term opportunity and near-term financial strain. In August, management revealed preliminary first-quarter fiscal 2026 revenues of only about $70.2-$70.4 million, which is down about 19% from $87.2 million a year earlier and drastically below the $100-$109 million range they had guided for that quarter in May. GAAP operating loss is estimated to be in the range of $124.7 million-$124.9 million, while the non-GAAP operating loss is predicted to be between $57.7 million and $57.9 million.
This contraction raises questions about the timing of deal closures, the sustainability of demonstration-license revenue, and whether partner-driven bookings can convert to recurring subscription growth at the expected pace.
Despite the rough preliminary first-quarter fiscal 2026 report, there are several underlying positives that may have helped C3.ai to offset the negatives. C3.ai’s diversified growth beyond Oil & Gas might have helped the company to some extent. C3.ai entered fiscal 2026 with momentum from fiscal 2025, where revenue grew 25% year over year and non-oil and gas verticals surged 48%. Manufacturing, state and local government, and life sciences became meaningful contributors, with new logos such as U.S. Steel, Rolls Royce, and Bristol-Myers Squibb augmenting established relationships. This broadening mix reduces dependence on legacy energy contracts and supports a more balanced revenue base.
Another important factor is C3.ai’s strengthening of its partner ecosystem. A key tailwind is the deepening of cloud and consulting alliances. In the fourth quarter of fiscal 2025, 73% of agreements involved partners, with bookings through the channel up more than 400%. Collaborations with Microsoft (MSFT - Free Report) , Amazon’s AWS, Google Cloud, and newer entrants like PwC and McKinsey QuantumBlack extend C3.ai’s reach across geographies and industries. The strategy of selling via partner paper also shortens sales cycles by leveraging existing master agreements, a structural advantage in the adoption of enterprise AI.
The company has established strong traction in the public sector. Additional wins with the Defense Logistics Agency and the intelligence community position C3.ai to benefit from durable government funding streams. These deals, often multi-year in nature, provide visibility that can help offset volatility in commercial cycles.
Again, despite losses, C3.ai maintains a sizable liquidity position. Cash and equivalents stood at $711.9 million at the end of the fiscal first quarter (per the preliminary report), only modestly down from the $743 million reported in April. This buffer gives management flexibility to continue investing in product development, go-to-market, and partner enablement while targeting eventual non-GAAP profitability in fiscal 2027.
What the Zacks Model Unveils for C3.ai
Our proven model does not conclusively predict an earnings beat for C3.ai this reporting cycle. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: AI has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
C3.ai Share Price Performance
In terms of C3.ai’s share price performance, its shares have lost 34.1% in the past three months. AI stock has underperformed the Zacks Computer & Technology sector and the Zacks Computers - IT Services industry, as shown below.
At its current price, the AI stock represents a 62.5% discount from its 52-week high of $45.08. It also indicates a 15% premium to its 52-week low of $14.70.
C3.ai Share Price Performance
Image Source: Zacks Investment Research
C3.ai Stock’s Valuation
In terms of the forward 12-month price/sales (P/S), C3.ai shares are currently trading at a discount to its industry.
AI’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Why You Should Sell AI Stock Now?
C3.ai still has positives like strong partners, new customers outside of oil and gas, and plenty of cash on hand. But the near-term picture looks weak. The company’s early numbers for the first quarter of fiscal 2026 show revenue dropping almost 20% year over year and coming in far below guidance, while losses are widening faster than expected. This raises concerns about how quickly C3.ai can turn its pipeline of deals into steady subscription growth.
The stock has already lost more than 30% in the past three months and even though the valuation looks cheaper compared with peers, that alone is not enough to outweigh the company’s execution problems and lack of near-term profitability. Until C3.ai proves it can deliver consistent growth and narrow its losses, investors should consider selling the stock.