C3.ai (NYSE:AI) shares have been riding a wave of positive sentiment recently that got another boost following the release of the enterprise software company’s F2Q25 results.
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The numbers told a compelling story. Revenue climbed to $94.3 million, marking a 28.8% year-over-year improvement and outpacing the 21% growth seen in F1Q. The top line also beat Wall Street’s expectations by $3.28 million. Subscription revenue played a key role, rising 22% y/y to $81.2 million, up from the 20% growth posted in the prior quarter. On the earnings front, C3.ai delivered an adjusted EPS of -$0.06, beating analyst predictions by $0.10.
Although the company missed on the operating loss outlook for FQ3, expecting a loss in the range between ($38.6 million) – ($46.6 million) vs. consensus at ($30.5 million), it beat on the top-line forecast. C3.ai expects FQ3 revenue in the range between $95.5 and $100.5 million, with the midpoint of $98 million just edging ahead of Wall Street’s $97.5 million forecast. Meanwhile, the company raised fiscal 2025 revenue expectations from the range between $370 to $395 million to between $378 and $398 million. The Street was looking for $382.6 million.
While JMP analyst Patrick Walravens thinks the company is still facing some risks, like its reliance on Baker Hughes, which accounts for around 20% of its revenue and whose current contract is set to run out next June, he continues to like this story for several reasons.
For one, the company has notched seven consecutive quarters of accelerating revenue growth. Secondly, C3.ai offers a wide range of AI applications across industries such as manufacturing, defense, government, and oil and gas, demonstrating its expertise in the field, as evidenced by a recent patent on agentic AI. The company has also formed a significant six-year partnership with Microsoft, making it a preferred AI partner on Azure. At the same time, its dependence on Baker Hughes is falling, with its contribution to revenue steadily decreasing. Meanwhile, with a new government administration about to take hold of the reins, the company anticipates increased demand in areas such as federal and defense, as the focus shifts in a big way toward AI applications. Lastly, the 5-star analyst notes CEO Thomas Siebel’s “deep experience in the software industry,” having successfully sold his previous company, Siebel Systems, to Oracle for $5.8 billion in 2006.
With such sound prospects ahead, Walravens has now raised his price target for C3.ai shares from the prior $40 to a Street-high of $55, suggesting the stock will gain 32% over the coming months. Walravens’ rating stays an Outperform (i.e., Buy). (To watch Walravens’ track record, click here)
Not all analysts share Walravens’ enthusiasm. The broader analyst consensus rates C3.ai as a Hold (i.e., Neutral), reflecting a mix of 4 Hold, 2 Buy, and 1 Sell ratings. The average price target stands at $42.33, implying the stock will stay rangebound for the time being. (See AI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
