Better AI Stock: Oracle vs. C3.ai

Core Perspective - Oracle and C3.ai represent two distinct investment approaches in the AI market, with Oracle being a well-established player and C3.ai a high-growth challenger [1][2] Company Overview - Oracle is a leading database software provider with a significant cloud infrastructure platform, while C3.ai focuses on developing AI algorithms for integration into existing software [1][4] - C3.ai was founded by Tom Siebel, who previously founded Siebel Systems, acquired by Oracle for $5.85 billion in 2006 [1] Financial Performance - C3.ai's stock has declined approximately 50% over the past three years, trading at a 45% discount to its IPO price, while Oracle's stock has rallied nearly 90% during the same period [2] - Oracle's revenue grew at a compound annual growth rate (CAGR) of 8% from fiscal 2020 to fiscal 2024, with GAAP EPS increasing at a CAGR of 5% [6] - C3.ai's revenue grew at a CAGR of 19% from fiscal 2020 to 2024, with expectations of a 20% CAGR from fiscal 2024 to 2027 [7] Growth Drivers - Oracle's growth is driven by its cloud-based services, which accounted for 42% of its revenue in Q1 of fiscal 2025, with IaaS revenue surging 50% in fiscal 2024 [6] - C3.ai generates over 30% of its revenue from a joint venture with Baker Hughes, which is set to expire by the end of fiscal 2025 [5][4] Profitability - Oracle is profitable on a GAAP basis, while C3.ai remains unprofitable by both GAAP and non-GAAP measures [5] - Analysts expect Oracle's revenue and GAAP EPS to grow at a CAGR of 12% and 21%, respectively, from fiscal 2024 to 2027 [6] Investment Outlook - Oracle is viewed as a healthier investment due to its diversification, stable profits, and reasonable valuation, while C3.ai needs to address its profitability and dependency on Baker Hughes [8]