Innodata vs. C3.ai: Which AI-Focused Enterprise Stock is a Good Buy?

Innodata INOD and C3.ai AI are well-known artificial intelligence (AI) focused stocks that cater to the needs of enterprises. While Innodata offers AI data engineering and model training services, C3.ai provides an AI-powered software platform that offers data integration and analytics solutions. The striking similarity between these two companies is that both treat data as the fundamental entity for AI-led digital transformation.

Enterprises are rapidly deploying AI, and the advent of generative AI (Gen AI) has further accelerated usage. Per Gartner, global Gen AI spending is expected to hit $644 billion in 2025, indicating 76.4% growth over 2024. Services are expected to grow a massive 162.6% year over year to $27.76 billion, while software is anticipated to jump 93.9% to $37.12 billion. Per IDC, global spending on AI, including AI-enabled applications, infrastructure, and related IT and business services, will more than double by 2028 to hit $632 billion, seeing a CAGR of 29% between 2024 and 2028. Both Innodata and C3.ai benefit from this massive opportunity.

However, which stock is a better buy right now? Let’s find out.

The Case for Innodata

Innodata benefits from massive investment promises made by the “Magnificent 7,” including Microsoft’s $80 billion and Meta Platforms’ $64-$72 billion. The company is expanding relationships with key customers, including a second master statement of work with its largest client, tapping a separate, significantly larger budget. INOD secured approximately $8 million in new engagements from four of its other Big Tech customers. Erstwhile, small accounts are showing material expansion opportunities into multi-million-dollar bookings.

INOD is onboarding several major clients, including top global firms in enterprise tech, cloud software, digital commerce and healthcare technology, each with significant growth potential. The company expects 2025 revenues to jump 40% year over year to $238.6 million, driven by an expanding clientele. 

Innodata serves the Gen AI IT services market that is expected to be worth $200 billion by 2029, offering significant growth prospects. The company is building the capability to collect and create Gen AI training data as large language models (LLMs) become more complex and advanced. INOD continues to invest in expanding languages like Arabic and French within domains like math and chemistry, for which the company is creating LLM training data and performing reinforcement learning.

INOD recently launched its Generative AI Test & Evaluation Platform, a new suite designed to help enterprises assess the safety and reliability of LLMs. Built on NVIDIA’s NIM microservices, the platform supports hallucination detection, adversarial prompt testing and domain-specific risk benchmarking across text, image, audio and video inputs, helping organizations build more trustworthy AI.

The Case for C3.ai

C3.ai’s AI-powered platform operates more than 130 turnkey enterprise AI applications that address issues like predictive maintenance, supply chain optimization, supply network risk, demand forecasting, fraud detection, and drug discovery. In fiscal 2025, C3 Generative AI revenues jumped 100% and AI closed 66 C3 Generative AI initial production deployments across 16 industries.

C3.ai benefits from a rich partner base that includes Microsoft, Amazon Web Services, Google Cloud, Booz Allen and Baker Hughes. In fourth-quarter fiscal 2025, a notable 73% of all agreements were signed in collaboration with major cloud providers. Partner-driven bookings soared 419% year over year in the reported quarter, fueled by 59 deals closed via strategic alliances. C3.ai secured 193 deals through these partnerships over fiscal 2025, which was a 68% jump year over year.

C3.ai is gaining strong traction in the federal sector, with the United States government emerging as a key client. In fourth-quarter fiscal 2025, the company secured a $450-million contract ceiling from the U.S. Air Force for its PANDA predictive maintenance platform. C3.ai’s AI-driven platforms are now embedded across the Air Force, Navy, Marine Corps and Missile Defense Agency, which is a key catalyst for future prospects. 

An increasingly diversified business model, as C3.ai continues to expand its footprint across manufacturing, life sciences, and government (state and local government), boosts prospects. In fiscal 2025, non-oil and gas revenue surged 48% year-over-year, reflecting C3.ai’s successful expansion into 19 different industries.

Price Performance and Valuation of AI and INOD

In the year-to-date period, Innodata shares have surged 29.6%, outperforming C3.ai shares, which have dropped 28.6%.

Stock Performance: AI vs. INOD

Valuation-wise, both C3.ai and Innodata shares are currently overvalued, as suggested by a Value Score of F.

Valuation: AI vs. INOD

In terms of forward 12-month Price/Sales, C3.ai shares are trading at 6.81X, higher than Innodata’s 6.03X.

How Do Earnings Estimates Compare for AI and INOD?

The Zacks Consensus Estimate for AI’s fiscal 2026 loss is pegged at 37 cents per share, which has narrowed from a loss of 46 cents over the past 60 days. C3.ai reported a loss of 41 cents per share in the year-ago quarter.
 

C3.ai, Inc. Price and Consensus

C3.ai, Inc. price-consensus-chart | C3.ai, Inc. Quote

The consensus mark for Innodata’s 2025 earnings is pegged at 69 cents per share, which has fallen 6.8% over the past 60 days. The figure indicates a whopping 22.47% decrease year over year.

AI is a Better Buy Than INOD Right Now

Despite Innodata’s solid growth prospects thanks to massive spending by Big Tech, we believe C3.ai’s rich partner base, innovative Gen AI-powered platform, and an increasingly diversified business model should attract investors.

C3.ai currently carries a Zacks Rank #2 (Buy), which makes it a strong pick compared with Innodata, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research