C3.ai Stock Surges but “Profitability Still Matters,” Says Canaccord

All eyes are naturally on Nvidia following the AI giant’s strong F1Q readout, but a less heralded AI name is making bigger strides in today’s trading. Shares of C3.ai (NYSE:AI) are charging ahead in Thursday’s session, up by 31% as of writing, with investors applauding the AI software provider’s latest quarterly readout.

In its fiscal fourth quarter (April quarter), the company generated revenue of $108.72 million, amounting to a 25.5% year-over-year increase and beating the Street’s forecast by $1.02 million. The company also reported a record $135 million in bookings for FQ4, more than tripling the $42 million recorded in the same quarter last year. At the other end of the scale, adj. EPS of -$0.16 beat analyst expectations by $0.04.

C3.ai called for FQ1 revenue between $100 million and $109 million, and full-year revenue between $447.5 million and $484.5 million, slightly below consensus estimates of $105.88 million for the quarter and $466.13 million for the year. That didn’t seem to bother investors, however, who seemed to be reacting to not only the results but other positive developments.

The company said that the U.S. Air Force Rapid Sustainment Office (RSO) has increased C3.ai’s contract ceiling to $450 million, extending through October 2029. The extra $350 million in available funding will help expand C3 AI’s predictive analytics and aircraft maintenance platform across the service’s entire fleet and related systems.

Additionally, alongside the earnings report, C3.ai announced the extension of its strategic partnership with Baker Hughes through June 2028. The renewed deal shows both companies are still committed to using AI to tackle challenges in the energy and industrial spaces. Baker Hughes also plans to roll out more of C3.ai’s tools – like Sourcing Optimization, Inventory Optimization, and the Sustainability Suite – as part of its broader push to modernize operations.

Canaccord analyst Kingsley Crane says that might be the “most significant development of FQ4 results, silencing market concerns about the relationship’s future.”

This marks the fifth time the partnership with Baker Hughes has been expanded, now running through 2028 – three years past its original June 2025 end date. So far, the collaboration has generated around $500 million in revenue for C3.ai, thanks to major customers like Shell, ExxonMobil, ENI, and Koch. “The renewal keeps a stable, high‑visibility revenue stream in place while preserving the strategic co‑selling motions that have opened doors across the energy value chain,” Crane went on to say.

Crane is also encouraged by the recovery of CEO Tom Siebel, who after being diagnosed with an autoimmune condition called giant cell arteritis, has made solid progress in regaining his health over the past quarter and is now back out meeting with customers.

However, all of that is not quite enough for Crane to get on board the AI train. “From a stock perspective, ongoing cash burn and potential growth moderation in coming quarters could put pressure on the multiple at these levels,” he said. “While we place a much greater emphasis on growth prospects in our valuation methodology, profitability still matters.”

Accordingly, Crane maintained a Hold (i.e., Neutral) rating on the shares while his price target goes from $30 to $28. Given Thursday’s gains, the stock has now crossed that target. (To watch Crane’s track record, click here)

This stock does not get much love from Crane’s colleagues, either. The shares get a Moderate Sell consensus rating, based on 2 Holds and Sells, each. Meanwhile, the $18.5 average target suggests the stock is now overvalued by 38.5%. (See C3.ai stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.