C3.ai Is Down 58%, but Here's Why I'm Still Not Buying the AI Stock

Admittedly, the lawsuit for C3.ai could look bullish connected the surface. Through the company's endeavor software, entities tin make and instrumentality AI applications quickly. Also its industry-specific solutions look to person helped it physique captious partnerships, and enabling customers to capitalize connected generative AI has apt strengthened specified ties.

It has collaborated with lipid elephantine Baker Hughes since 2019. Also, Amazon's Amazon Web Services and Microsoft's Azure person extended partnerships, indicating that its solutions adhd value.

However, different developments springiness investors bully crushed to question the concern lawsuit for the company. The Baker Hughes concern comes up for renewal soon, and investors person not received immoderate indications that statement volition continue.

Additionally, macro concerns are weighing connected stocks. Between the uncertain system and geopolitical tensions, investors person questioned whether they privation to enactment successful the stock.

Furthermore, the company's financials whitethorn besides marque investors reluctant to ain this stock, astatine slightest erstwhile looking beyond the surface.

For the archetypal 9 months of fiscal 2025, it earned implicit $280 cardinal successful full revenue. That besides meant that its gross borderline roseate to 60% versus 57% successful the archetypal 9 months of fiscal 2023, an denotation of its stronger gross comparative to the outgo of its services.

Still, successful the 3rd 4th of its fiscal 2025 (ended Jan. 31), gross grew 26% twelvemonth implicit twelvemonth to $99 million, ending a seven-quarter streak of accelerating gross maturation arsenic it could not lucifer the 29% complaint of summation successful its 2nd quarter.

Also, costs and expenses for Q3 came successful astatine much than $516 million, 84% much than its revenue. That amounted to a nett nonaccomplishment of $209 million. While that was lone a flimsy driblet from the $206 cardinal mislaid successful fiscal 2024, it is apt discouraging for investors looking for fiscal improvements.

Moreover, that nonaccomplishment is much than the company's $174 cardinal successful stock-based compensation successful the archetypal 9 months of the fiscal year. That means that adjacent with conscionable $2 cardinal spent during that play connected spot and equipment, escaped currency travel was conscionable nether antagonistic $55 million.