Prediction: This Stock Will Be Worth More Than C3.ai 1 Year From Now

Key Points

• C3.ai stock has been sliding this year, and analysts aren't optimistic about its turnaround prospects in the coming year.

• Another cloud computing company, DigitalOcean, is capitalizing on the growing adoption of AI and has the potential to deliver impressive gains.

• The AI-fueled earnings gains that DigitalOcean could deliver in the next year could help it overtake C3.ai's market cap.

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Pure-play enterprise artificial intelligence (AI) software company C3.ai (NYSE: AI) has had a 2025 to forget so far. It lost almost 22% so far this year at this writing.

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Though the company has been delivering healthy growth on account of the rising adoption of its AI software solutions by both commercial and government customers, the market doesn't seem to have much confidence in the stock right now. Out of 17 analysts covering it, only four recommend buying it. Their 12-month median price target of $26 points toward a slight decline from current levels.

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What's weighing on C3.ai's prospects?

One reason analysts aren't upbeat about C3.ai's prospects is that it has been performing poorly on the bottom line. The company isn't profitable yet and it hasn't shown much improvement on that front. Its non-GAAP net loss in its 2025 -- which ended April 30 -- contracted by just 13% while the top line grew by 25%.

Of course, C3.ai is investing in pursuit of growth so that it can capitalize on the immense opportunity in AI software. However, the one-year price target suggests that its market cap could decline further from the current level of about $3.4 billion. Meanwhile, there's another company in the space that's expected to jump nicely in the near term, and could even be worth more than C3.ai a year from now.

AI is all set to drive terrific growth for this company

DigitalOcean Holdings (NYSE: DOCN) provides a cloud computing platform that's mainly used by small companies and early-stage developers. This explains why its strategy of offering cloud computing servers powered by graphics processing units (GPUs) from the likes of Nvidia and Advanced Micro Devices is turning out to be a smart one.

For instance, DigitalOcean announced that it is offering its clients computing power from a broad range of Nvidia's GPUs, ranging from its older RTX series to popular AI accelerators such as the H100 and H200. Additionally, AMD's MI300 GPUs are also available through DigitalOcean's platform to customers who want to build AI applications, and the company makes it easy for clients to scale up their use of its services based on their needs.

DigitalOcean claims that its customers can save up to 75% in costs by running their AI workloads on its GPU-powered servers as compared to working with hyperscalers. Importantly, DigitalOcean's cloud-based platform can run a wide variety of workloads, including training large language models (LLMs), running inference applications, content creation, and 3D modeling.

The cost-effective nature of DigitalOcean's AI-focused offerings helps explain why its customers are now spending more money on its solutions. Its average revenue per user increased by an impressive 14% year over year in the first quarter of 2025. Importantly, it has tremendous opportunities in the GPU-as-a-service market, which is expected to more than 10 times from about $4.3 billion in 2024 to almost $50 billion by 2032.

As a result, DigitalOcean seems well-placed to benefit from new customers and also from winning more business from its existing customers. Specifically, management is expecting it to increase its customer base at an annualized rate of 13% over the next couple of years, and foresees existing customers increasing their spending by 5% to 7% every year. The company has targeted an annual revenue growth rate of 18% to 20% through 2027.

Moreover, with its anticipated increase in average revenue per user improving its margins, it should book robust bottom-line growth. It is worth noting that DigitalOcean's adjusted earnings increased by 30% year over year in Q1, outpacing the 14% growth in its revenue. So, the improvement in the revenue growth rate that DigitalOcean is forecasting has the potential to increase its earnings power as well.

All this helps explain why analysts have a consensus 12-month price target of $38 on DigitalOcean -- 32% higher than its current level. Its market cap today is about $2.60 billion, and the projected jump over the next year could take it to $3.5 billion. That's where C3.ai's market cap currently stands.

So if C3.ai shares remain under pressure over the next year and DigitalOcean delivers the growth that analysts and management are expecting, the latter's market cap could exceed the former's.

DigitalOcean is trading at just 15 times forward earnings. That's about half the tech-laden Nasdaq-100 index's average forward earnings multiple. Considering the potential for an acceleration in its earnings growth, the market may decide to reward the stock with a richer valuation multiple. With all that in mind, DigitalOcean looks like a top AI stock to buy right now, not only to hold for the next year, but for the long run as well.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, DigitalOcean, and Nvidia. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.