C3.ai Stock Slides 32% in 6 Months: Right Time to Buy the Dip?

C3.ai, Inc. AI shares have witnessed a sharp decline of 32.2% in the past six months compared with the industry’s decrease of 12.5%. At the same time frame, the S&P 500 has dropped 1%.

The company’s stock has been pressured by persistently high costs despite top-line growth. Its consumption-based pricing model has increased pilot costs without guaranteed conversion. Transitioning contracts and customer acquisitions are expensive and margin-dilutive.

C3.ai is actively scaling its operations, particularly through the expansion of its direct salesforce and strategic partner ecosystem, which includes Microsoft, AWS and McKinsey's QuantumBlack. While this investment is central to long-term growth, it also introduces near-term pressure on the operating margin.

Price Performance

AI Stock Gains 6% in a Month

In the past month, the stock has witnessed a gain of 6.4% against the industry decline of 0.4%. The AI stock closed at $24.17 on Monday, still trading well below its 52-week high of $45.08 but above its low of $17.03. In the same time frame, other industry players, such as Asana, Inc. ASAN and Braze, Inc. BRZE, have seen their stocks decline 13% and 28.3%, respectively.

C3.ai’s Estimate Revision Trend

The Zacks Consensus Estimate for fiscal 2026 and 2027 loss per share has narrowed to 37 cents and 16 cents from a loss of 47 cents and 45 cents in the past 30 days, respectively.

The Zacks Consensus Estimate for fiscal 2026 and 2027 sales implies growth of 20.1% and 21.8%, respectively. Meanwhile, Asana and Braze’s sales in fiscal 2026 are likely to witness increases of 7.9% and 18.7%, respectively.

Factors Favoring AI

C3.ai is gaining strong traction in the federal sector, with government partnerships emerging as key growth drivers. In fourth-quarter fiscal 2025, the company reached a milestone, a $450-million contract ceiling from the U.S. Air Force for its PANDA predictive maintenance platform. Already deployed across various aircraft, PANDA’s latest expansion highlights C3.ai’s growing role in national defense systems.

What sets the federal business apart is its broad agency adoption. C3.ai’s AI-driven platforms are now embedded across the Air Force, Navy, Marine Corps and Missile Defense Agency. From enhancing supply-chain visibility in fuel operations to enabling predictive analytics for aircraft readiness, the company’s agentic AI and generative tools are delivering mission-critical, real-time insights across defense operations.

C3.ai is intensifying its go-to-market focus by leaning heavily on its growing partner ecosystem. In fourth-quarter fiscal 2025, a notable 73% of all agreements were signed in collaboration with major cloud providers such as Microsoft, AWS and Google Cloud. Over the full fiscal year, the company secured 193 deals through these partnerships, a 68% increase from the prior year.

The impact is especially visible in partner-driven bookings, which soared 419% year over year in fourth-quarter fiscal 2025, fueled by 59 deals closed via strategic alliances. A key highlight is C3.ai’s strengthened relationship with Microsoft. Its applications are now featured in the Azure sales catalog, and Microsoft’s global sales team earns commissions for successful deal closures. In the fourth-quarter fiscal 2025 alone, C3.ai and Microsoft partnered on 28 joint deals, particularly targeting customers in the manufacturing and chemical sectors.

Conversely, C3.ai expanded its customer footprint across both commercial and government sectors. Notable wins included Flex, Sanofi, ExxonMobil, Shell and the U.S. Department of Defense. These clients adopted solutions ranging from predictive maintenance and mission assurance to customer service enhancement using C3 Generative AI.

C3.ai Valuation

Despite the recent gain, AI is priced at a discount relative to its industry. It has a forward 12-month price-to-sales ratio of 6.64, which is well below the industry average. Meanwhile, Asana and Braze’s forward 12-month price-to-sales ratios are 3.83 and 3.77, respectively.

P/S (F12M)

End Notes

C3.ai’s recent stock weakness masks meaningful operational progress and long-term potential, making it a compelling buy for forward-looking investors.

While near-term profitability remains pressured by elevated costs and a complex transition to a consumption-based pricing model, the company is building a robust foundation through government contracts, deeper partnerships with hyperscalers like Microsoft and AWS, and expanding commercial traction across sectors. Its growing role in national defense and rising partner-driven deal volume point to increasing demand and validation of its AI solutions.

As market sentiment stabilizes, these structural advantages position C3.ai for durable revenue growth and margin improvement over time. AI currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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