Shares of C3.ai (AI) sank in after-hours trading after the software company reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at -$0.12, which beat analysts’ consensus estimate of -$0.25 per share. Sales increased by 26% year-over-year, with revenue hitting $98.8 million. This also beat analysts’ expectations of $98.13 million.
The solid results were driven by artificial intelligence-related spending that remained strong during the quarter. This also led to a 22% rise in subscription revenue to $85.7 million and a 64% increase in professional services revenue to $13.1 million.
Furthermore, C3 AI has formed new partnerships and strengthened existing ones with big players like Microsoft (MSFT), Amazon Web Services (AMZN), and McKinsey & Company. These partnerships have already led to a significant increase in business deals, with 47 agreements signed in the last quarter alone. C3 AI’s partnership with Microsoft has been particularly successful, with a big jump in joint projects and new business opportunities.
C3.ai Provides Guidance
Looking forward, management has provided the following guidance for the rest of 2025:
- Q4 revenue between $103.6 million and $113.6 million versus estimates of $108.6 million
- Q4 loss from operations of -$40 million to -$30 million compared to expectations of -$41.9 million
- FY25 revenue between $383.9 million and $393.9 million versus estimates of $388.3 million
- FY25 loss from operations of -$87 million to -$97 million compared to expectations of -$118.6 million
As you can see, guidance was a solid beat. However, shares still fell in after-hours trading despite the fact that C3.ai stock declined heading into earnings. This suggests that the hype surrounding artificial intelligence stocks may be starting to fade, at least for the time being.
What Is the Price Target for AI?
Turning to Wall Street, analysts have a Hold consensus rating on C3.ai stock based on two Buys, four Holds, and four Sells assigned in the past three months. After a 12% decline in its share price over the past year, the average C3.ai price target of $37.22 per share implies 40.1% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
