Share costs of C3.ai (AI 2.80%) gained greater than 20% within the Might 29 buying and selling session following the discharge of the corporate’s fiscal 2025 fourth-quarter outcomes the afternoon prior. That ought to not have been shocking, because the enterprise synthetic intelligence (AI) software program supplier has been capitalizing on the fast-growing adoption of this expertise by each business and authorities clients.

The corporate was well-placed to ship stronger-than-expected outcomes for the quarter (which ended on April 30), and that is exactly what occurred: Its high and backside strains had been higher than analysts’ consensus estimates. 

Let us take a look at the explanation why C3.ai inventory is on fireplace proper now and test why it might be a good suggestion for traders to purchase it immediately.

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C3.ai’s contract wins ought to result in stronger progress

C3.ai booked $389 million in income in its fiscal 2025, a rise of 25% from the earlier 12 months. Administration forecasts a rise of 20% within the present fiscal 12 months on the midpoint of its steering vary. Whereas that factors towards a slower charge of progress, there’s a robust chance that C3.ai will find yourself delivering quicker progress than that this 12 months.

That is as a result of the corporate’s generative AI software program options have gained spectacular traction amongst clients, which is clear from the contracts that it has been signing of late. C3.ai introduced that the U.S. Air Pressure has signed an incremental contract price $350 million. The up to date contract — price a complete of $450 million — runs by way of October 2029, with C3.ai offering an AI-powered predictive upkeep platform for monitoring parts in actual time throughout a number of kinds of plane.

It’s price noting that C3.ai closed 51 agreements with authorities clients final 12 months and in addition expanded its current offers with present clients, which embrace the Military and the Navy. In the meantime, the corporate’s technique of providing its generative AI purposes by way of cloud computing giants reminiscent of Microsoft, Amazon, and Alphabet‘s Google can also be paying off. It closed a complete of 193 agreements by way of its associate channel, a rise of 68% from the previous 12 months.

Even higher, C3.ai factors out that its 12-month potential gross sales pipeline by way of its cloud associate community has elevated by 37%, suggesting that it’s more likely to land extra enterprise sooner or later. Additionally, its generative AI options had been within the preliminary deployment part at 36 clients on the finish of the earlier quarter. Provided that C3.ai’s clients are likely to broaden their partnerships with the corporate over time, it will not be shocking to see these purchasers enhance the dimensions of these contracts past what the preliminary deployments known as for.

Briefly, the stage appears set for C3.ai to clock stronger progress sooner or later, and that is precisely what analysts anticipate.

Information by YCharts.

Its valuation continues to be on the inexpensive facet

C3.ai’s underperformance on the inventory market to date this 12 months signifies that traders should purchase it at a gorgeous degree proper now. It’s buying and selling at slightly below 9 instances gross sales, which is sort of low cost after we contemplate that its closest peer, Palantir, trades at 105 instances gross sales. 

Assuming C3.ai’s progress certainly accelerates over the following three fiscal years, and it achieves the $705 million in income that analysts venture, if it is nonetheless buying and selling at its present gross sales a number of, its market cap would have jumped by 77% to $6.2 billion.

So, traders trying so as to add a high AI inventory to their portfolios that is buying and selling at engaging ranges and able to delivering wholesome long-term positive factors ought to contemplate shopping for C3.ai. Its newfound momentum appears sustainable for a very long time to return.