The Motley Foolยท2025-07-25 09:15Core Viewpoint - C3.ai and Palantir are both leading companies in the AI sector, but Palantir is identified as the superior investment option due to its business model, growth, and profitability metrics [1][6][16] Business Models - Both companies provide AI-powered data analytics software that offers actionable insights and AI automation capabilities [3] - C3.ai focuses on pre-built applications, while Palantir offers a customizable platform that allows for diverse AI applications, giving it a competitive edge in flexibility [5] Customer Base - Both companies have a significant presence in government and commercial markets, with C3.ai deriving 31% of its bookings from government entities and Palantir generating 55% of its revenue from the government [4] Growth Metrics - Palantir's revenue grew by 39% year over year to $884 million in Q1, with an expected growth rate of 38% in Q2 [6] - C3.ai's revenue increased by 26% year over year to $109 million in Q4 FY 2025, but its growth is projected to decline to 20% for FY 2026 [7] Profitability - Palantir has a profit margin of 24%, indicating a commitment to both growth and profitability [10] - C3.ai is currently unprofitable and is burning cash, making it unlikely to achieve profitability in the near future [10][15] Valuation - Palantir's stock is valued at over 120 times sales, which is considered extremely high and may hinder future profitability [13] - In contrast, C3.ai's stock is valued at 9.5 times sales, appearing undervalued but reflecting its unprofitability [13][15] Investment Recommendation - While Palantir is deemed the better company, its high valuation raises concerns about future profitability, and C3.ai's low valuation does not compensate for its lack of profitability [16]