Key Points
A major disruption to C3.ai's management team last year led to a crash in the company's sales, but renewed growth might be around the corner.
C3.ai is moving away from offering individual artificial intelligence (AI) applications to its enterprise customers, and is becoming a major platform provider instead.
C3.ai stock might struggle to recover until the company proves it can reverse its declining sales and steep losses.
Artificial intelligence (AI) has created trillions of dollars' worth of value for some of America's largest organizations over the last few years, but not every company in this booming industry has been a winner. C3.ai (NYSE: AI) stock, for instance, is down 22% in 2026 (as of the market close last Friday, Sept. 4), as investors abandon ship over the company's declining revenue and steep losses.
Last September, C3.ai's founder, Thomas Siebel, stepped down from his role as CEO to focus on his health issues. Since he played a central role in the sales and customer relationship management processes, his departure led to a sharp decline in the company's revenue.
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Fortunately, Siebel returned to lead C3.ai in May, and he is determined to get things back on track. Is it time for investors to start buying the stock?
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A shift from AI applications to critical AI platforms
Developing AI software applications from scratch can be extremely expensive, and it requires specialized technical expertise. Not every business has those resources, so they rely on service providers like C3.ai that can deliver turnkey solutions. But C3.ai's business model is changing -- it still has a portfolio of ready-made AI apps, but it's also becoming a platform provider.
The company launched the C3 Agentic AI Platform late last year, which is effectively an intelligent operating system for businesses. It gains a deep understanding of every existing entity, process, relationship, and piece of data within the enterprise, facilitating the creation of powerful agents that can automate tasks and make key operational decisions (with human permission).
One of the newest tools on the C3 Agentic AI Platform is C3 Code, an advanced programming tool that can build software based on instructions provided in plain English. In other words, it gives enterprises the ability to build their own applications at a lightning-fast pace, even if they don't have a team of world-class engineers.
C3.ai's pivot to become a platform provider is very important, because enterprise AI requires a unified whole-of-business approach. Deploying just one application isn't enough for the average enterprise to stay ahead of their competitors anymore; AI needs to be at the core of every process to maximize productivity and value.
C3.ai expects sales to sink further
C3.ai generated $250.3 million in total revenue during its 2026 fiscal year (ended April 30), a 35% decline from the previous year. The company then generated $52.4 million in revenue during its fiscal 2027 first quarter (ended July 31), a 25% year-over-year decline.
These poor results were a direct consequence Siebel's brief departure, but now that he is back on board, C3.ai's performance is expected to improve. Management's latest forecast suggests the company could deliver up to $240 million in revenue during fiscal 2027 overall, representing a much narrower year-over-year decline of 4% from fiscal 2026. Moreover, Siebel believes a return to sales growth could happen within the next two quarters.
C3.ai has completely restructured its sales department and dramatically cut costs to support its turnaround, which were necessary steps to keep its bottom line in check after its net loss soared by 63% to $470.3 million during fiscal 2026. The company still lost $92.8 million during the fiscal 2027 first quarter, but that was a 20% reduction from the year-ago result.
Plus, C3.ai was modestly free cash-flow positive to the tune of $2.1 million during the first quarter, so the bottom line is certainly trending in the right direction.
A beaten-down stock isn't necessarily a cheap stock
C3.ai stock currently trades at a price-to-sales (P/S) ratio of 6.5, which is a discount to its five-year average of 9.4. However, because the company's revenue is forecast to shrink during fiscal 2027, its forward P/S ratio is actually higher than its trailing P/S ratio.
AI PS Ratio data by YCharts
In other words, C3.ai is more expensive when valued against its future financial results than it is today, which is precisely why investors typically avoid buying into shrinking businesses -- they tend to destroy shareholder value over time. However, since Siebel believes C3.ai will return to sales growth on a quarterly basis soon, this particular case might be an exception.
During the first quarter, the company experienced a 73% quarter-over-quarter increase in its gross bookings, which usually represent the value of signed contracts for services that will be delivered in the future. Bookings are often a useful predictor of revenue, so Siebel's optimism might be warranted.
With that said, it might be a good idea for investors to wait until C3.ai's sales actually return to growth before buying its stock, in order to minimize potential risks.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.