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C3.ai’s AI newly announced partnership with defense contractor HII HII could prove pivotal for its growth trajectory, mainly in the government sector. The collaboration aims to integrate C3.ai’s Enterprise AI technology into the planning, operations, and supply chains of HII’s shipbuilding divisions, potentially accelerating the U.S. Navy’s fleet readiness.
This isn't just another defense tech partnership. For C3.ai, this alliance expands its federal footprint at a time when the Department of Defense is rapidly digitizing operations. By deploying its AI capabilities at Newport News Shipbuilding and Ingalls Shipbuilding, C3.ai will not only support national defense but also showcase its enterprise-grade software in one of the most complex industrial environments.
This collaboration builds on a successful six-month pilot program at HII’s Ingalls Shipbuilding, where C3.ai’s algorithms were used to optimize scheduling and labor allocation. Now, the companies are scaling that success across HII’s operations. The deployment will focus initially on enhancing planning and throughput in building amphibious ships, destroyers, aircraft carriers, and submarines.
Such real-time optimization is exactly where C3.ai’s strength lies. By combining its C3 Agentic AI Platform with HII’s production systems, the company is delivering a solution that addresses a critical bottleneck in national defense: shipbuilding delays. The scale-up from the pilot project sends a strong signal that C3.ai’s technology has real-world viability—and now, broader validation within defense infrastructure.
The HII deal follows a string of wins for C3.ai in the defense and intelligence sectors. In the fourth quarter of fiscal 2025, C3.ai expanded its work with the U.S. Air Force, securing a $450 million contract ceiling for its PANDA predictive maintenance platform. It also deepened engagement with the Department of Defense, Navy, Marine Corps, and intelligence agencies.
These partnerships are not just symbolic. They help build recurring revenue while positioning C3.ai as a go-to vendor for AI-driven operational intelligence in mission-critical applications. CEO Tom Siebel described defense as a "large and rapidly growing business" during the recent fiscal fourth-quarter earnings call, reinforcing its significance to C3.ai’s long-term growth strategy.
Beyond federal contracts, C3.ai’s broader performance has been strengthening. In the fiscal fourth quarter, the company reported revenues of $108.7 million, marking 26% year-over-year growth.
In fiscal 2025, total revenues of $389.1 million increased 25% year over year, marking the third consecutive year of accelerating top-line growth. Subscription and prioritized engineering services accounted for 96% of total revenues—a sign of increasing product stickiness and lower dependence on one-off services.
Moreover, the renewal of a key alliance with Baker Hughes BKR — a relationship that has already generated more than $500 million in revenue — further bolsters C3.ai’s credibility and reach in industrial markets. This kind of customer longevity matters as the company scales its applications across energy, manufacturing, and now, defense.
Partner-supported bookings have also exploded, growing 419% year over year in the fiscal fourth quarter. C3.ai now collaborates with giants like Microsoft MSFT, AWS, Google Cloud, and McKinsey QuantumBlack. These alliances not only boost distribution but also enhance credibility with enterprise buyers, especially in regulated and high-risk sectors like defense.
The partnership with HII also underscores the relevance of C3.ai’s Agentic AI platform—an innovation the company has patented and now deployed in over 100 use cases across multiple industries. Unlike other AI vendors that focus on tools or infrastructure, C3.ai delivers ready-to-use applications for specific problems such as predictive maintenance and supply chain risk.
This verticalized, application-first model sets C3.ai apart, especially as enterprise buyers increasingly seek AI tools that solve business problems out of the box. The HII deployment, like PANDA for the Air Force or Pluto for the Defense Logistics Agency, is another example of how C3.ai’s technology is becoming essential infrastructure.
C3.ai shares have witnessed an 11.8% jump in the past three months, outperforming the Zacks Computers - IT Services industry’s increase of 5.8%. At the same time frame, the Zacks Computer and Technology sector and the S&P 500 Composite have gained 19% and 9.1%, respectively.
Share Price Performance
The Zacks Consensus Estimate for fiscal 2026 and 2027 loss per share has narrowed to 37 cents and 16 cents from a loss of 48 cents and 25 cents in the past 30 days, respectively. The estimated figure for fiscal 2026 reflects an improvement from the year-ago reported loss of 41 cents per share.
The Zacks Consensus Estimate for fiscal 2026 and 2027 sales implies growth of 20.1% and 21.8%, respectively.
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 6.81, which is well below the industry average.
C3.ai Valuation
The HII partnership arrives at a time when C3.ai, a Zacks Rank #2 (Buy) company, is building momentum across multiple fronts: strong revenue growth, expanding partner ecosystems, renewed customer relationships, and an unmatched position in AI-powered enterprise applications. Importantly, it adds yet another proof point in the defense sector, which has become one of the company’s fastest-growing verticals. 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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