ZACKSยท2025-08-08 15:06Core Insights - C3.ai, Inc. closed fiscal 2025 with strong momentum, positioning its Generative AI and agentic AI platforms as central growth drivers for fiscal 2026 [1] - The company reported fiscal fourth-quarter revenues of $108.7 million, up 26% year over year, exceeding estimates, with subscription and prioritized engineering services comprising 96% of total sales [1][10] Revenue Growth - Generative AI revenue more than doubled in fiscal 2025, driven by 66 initial production deployments across 16 industries, including significant contracts with Bristol-Myers Squibb, Dow, the U.S. Navy, and the USC Shoah Foundation [2] - The deployment with the USC Shoah Foundation is expected to save over $33 million and reduce archival processing time by a decade, highlighting the business and societal value of C3.ai's solutions [2] Market Strategy - C3.ai's partner-driven go-to-market approach, supported by alliances with Microsoft, AWS, Google Cloud, and collaborations with PwC and McKinsey QuantumBlack, enhances distribution and adoption [3] - Federal contracts, such as the expanded $450 million U.S. Air Force PANDA program, contribute to a recurring, high-credibility revenue stream [3] Future Projections - With 95% of fiscal 2025 bookings tied to AI applications and over 130 turnkey enterprise AI solutions deployed, C3.ai differentiates itself from infrastructure and model providers [4] - Management projects fiscal 2026 revenues of $447.5 million to $484.5 million, with free cash flow expected to turn positive by the fourth quarter of fiscal 2026 [4] Competitive Landscape - C3.ai faces competition from Palantir Technologies and Veritone, both targeting leadership in AI-driven enterprise solutions [6] - Palantir has established a strong presence in government and defense sectors, while Veritone focuses on AI-powered media, legal, and energy applications [6][7] Stock Performance - C3.ai shares have lost 3% in the past three months but have outperformed the Zacks Computers - IT Services industry [8] - The stock is currently trading at a discount compared to industry peers, with a forward 12-month price-to-sales (P/S) ratio of 6.15 [11] Earnings Estimates - The consensus estimate for fiscal 2026 and 2027 sales implies growth of 20.1% and 21.8%, respectively, with an expected improvement in the bottom line from a year-ago loss of 41 cents per share [12]