Is C3.ai Stock a Buy Now?

Should investors start buying this AI software stock after its latest quarterly report?Shares of C3.ai (AI +1.49%) have witnessed a big sell-off this year, losing more than 55% of their value, as of this writing. This decline isn't surprising, as the company has fallen upon tough times lately, losing its way in the fast-growing generative artificial intelligence (AI) software market. The stock nosedived in August of this year after the company revealed it would miss its guidance by a significant margin. Former CEO Thomas Siebel had to step aside due to health issues, which created a crisis of confidence among investors, as he played a key role in C3.ai winning new business. The company also withdrew its fiscal 2026 guidance on account of near-term uncertainty. However, it appears that C3.ai's latest results have instilled some confidence in the stock. The company released its fiscal 2026 Q2 report (for the three months ended Oct. 31) on Dec. 3. Shares of the company were up by more than 4%, following the release. Below, I'll examine why that was the case and determine whether this AI stock is now a worthwhile investment. Image source: Getty Images. C3.ai finally has some revenue visibility The reorganization of C3.ai's sales force and leadership churn has disrupted the company's momentum. The pure-play enterprise AI software company delivered a decent increase of 25% in revenue in fiscal 2025 to $389 million. It also guided for a 20% increase in revenue in the current fiscal year to a midpoint of $466 million.Advertisement However, it took the company less than three months to withdraw its guidance. Its revenue in the first six months of fiscal 2026 has dropped by 20% to $145 million. The positive takeaway from its latest earnings report is that it now expects to generate nearly $300 million in revenue for the current year. While this suggests a slight acceleration in growth in the second half of the fiscal year, the new guidance is still well below C3.ai's original target. Also, C3.ai's top line is on track to shrink by 23% this year, as per its guidance. However, it wasn't all doom and gloom for investors, as there were several silver linings in C3.ai's quarterly report. The company pointed out that it witnessed a solid quarter-over-quarter jump of 49% in its bookings during the quarter. It closed a total of 46 agreements during the quarter, including expanded agreements with existing customers. ExpandNYSE: AIC3.aiToday's Change(1.49%) $0.23Current Price$16.05Key Data PointsMarket Cap$2BDay's Range$15.61 - $16.3152wk Range$12.59 - $44.34Volume101KAvg Vol7.3MGross Margin54.58%Dividend YieldN/A These agreements are likely to have boosted the company's revenue pipeline. That's because it closed 17 agreements valued at over $1 million, while six agreements were worth $5 million or more. Another point worth noting is that C3.ai's federal business was in solid shape last quarter, registering 89% year-over-year growth in bookings. Therefore, there's a chance that C3.ai will get back on track if it manages to sustain the deal momentum in the future. But does that make the stock a buy in anticipation of a potential turnaround? What should investors do? The generative AI software market that C3.ai caters to is poised for rapid growth, driven by the productivity and efficiency gains that this technology can deliver. According to one estimate, the AI software platforms market can clock an annual growth rate of 29% through 2034, generating annual revenue of $237 billion at the end of the forecast period. Therefore, there's ample opportunity for C3.ai to regain its mojo and start growing once again. This is precisely what analysts are projecting for the next couple of years. AI Revenue Estimates for Current Fiscal Year data by YCharts. Also, C3.ai is not as expensive as some of its peers. It has a price-to-sales ratio (P/S) of 5.3, a discount to the tech sector's average of 9. There's a reason why this generative AI company is cheap right now, but if it manages to turn its fortunes around, it may not be available at such a valuation in the future. That's why opportunistic investors may consider opening a small position in C3.ai. However, if you're cautious, add it to your watchlist so that you don't miss out on any concrete signs of a turnaround in this business.About the AuthorHarsh Chauhan is a contributing Motley Fool technology analyst covering semiconductors, consumer electronics, artificial intelligence, and software. Harsh previously worked as a journalist for CCN Markets covering crypto and macroeconomics, a contributor at Capital 10x covering metals, mining, and industrial stocks, and a research associate at Zacks Investment Research. He holds a bachelor’s degree in commerce from St. Xavier’s College in Kolkata, India.TMFTechJunk13X@techjunk13Read NextDec 3, 2025 •By Justin PopeDon't Buy C3.ai Stock Until This 1 Thing HappensNov 25, 2025 •By Parkev Tatevosian, CFAShould You Buy C3.ai Stock Before the Huge Investor Update?Nov 19, 2025 •By Rick OrfordMassive News: Why Analysts Still See 167% Upside for C3.ai StockNov 7, 2025 •By David Jagielski, CPACan C3.ai Be a Good Contrarian Stock?Nov 1, 2025 •By Keithen DruryCan C3.ai Become the Next Palantir Technologies?Oct 28, 2025 •By Anthony Di PizioShould You Buy C3.ai Stock After Its 50% Drop This Year? Here's What Wall Street Thinks