In January, I published a piece that asked a simple question: Could C3.ai, a provider of artificial intelligence software, ( AI 2.15%) potentially become the Palantir Technologies ( PLTR 1.84%) of 2025?
Jump to September 4, and the answer from the market is unmistakable. Palantir's stock has jumped by 105% year to date. Meanwhile, C3.ai's share price has dropped 54%, now sitting near its lowest point in years. So, the earlier question is now answered with a resounding "no."
Yet, just when it seemed that investor sentiment toward C3.ai couldn't get any worse, the company brought more troubling updates for its shareholders. Ultimately, C3.ai's ongoing struggles have greatly benefited those invested in Palantir.
C3.ai is facing serious challenges
In May, C3.ai announced its final results for fiscal 2025 (which closed on April 30), and also provided forecasts for both the first quarter and the full year of fiscal 2026.
The table below compares the company's previous financial projections with the actual results it reported.
| Total revenue | $100 million to $109 million | $70.3 million |
| Income from operations ( non-GAAP) | ($23.5 million to $33.5 million) | ($57.8 million) |
Source: Investor relations.
For revenue, C3.ai missed the midpoint of its guidance by over 30%, and its operating loss was about double the most negative estimate management had given. Making matters worse, revenue not only declined from the previous quarter but also fell below the same quarter last year.
Because of this disappointing performance, management retracted its earlier full-year forecast and chose not to provide any updated outlook, leaving investors uncertain about the company’s future revenue and profits.
This move not only adds to the uncertainty surrounding C3.ai’s prospects, but it also further undermines confidence in the management team at a time when trust is already shaky.
Image credit: Getty Images.
C3.ai's setbacks are a major advantage for Palantir shareholders
Both Palantir and C3.ai are often criticized for relying too heavily on a small group of customers. To address this, both companies have taken steps to broaden their client and revenue bases.
Over the past few years, C3.ai’s sales distribution has changed significantly. In March 2023, almost 72% of its bookings were from oil and gas businesses, with another 16% coming from government, aerospace, and defense clients.
Lately, C3.ai has started diversifying: industries like manufacturing, utilities, chemicals, and healthcare now make up a larger share of its business. Still, the company remains active in the public sector—32% of its first-quarter bookings were from state and local governments, along with aerospace and defense contracts.
Palantir has also diversified its client base, but the main distinction is the scale and significance of its deals. Having started out serving government agencies, Palantir has built a strong track record of landing major contracts, reinforcing its reputation as a vital partner in both public and private sectors.
- Defense and government: In May, Palantir’s agreement for the Maven Smart System was increased by $795 million, now totaling $1.28 billion. More recently, the U.S. Army rolled 75 separate deals into a single contract with Palantir, valued up to $10 billion over the next ten years. Beyond U.S. agencies, Palantir has expanded internationally, including a notable partnership with NATO.
- Commercial growth: On the business front, Palantir collaborates with major companies in aviation, such as Archer Aviation and American Airlines.
- Key partnerships: Palantir has created a network of alliances with top global technology and consulting names, including Oracle , Accenture, Amazon Web Services (AWS), Booz Allen Hamilton , PwC, Microsoft , KPMG, Databricks, and Deloitte.
These collaborations not only broaden Palantir’s reach but also strengthen its role as a foundational component in the enterprise AI software ecosystem.
On the other hand, although C3.ai has its own partners and contracts, these are typically smaller in scale and less crucial strategically. Palantir consistently secures the most significant opportunities, while C3.ai often competes for smaller, less impactful deals. This dynamic makes Palantir the preferred choice for critical projects, with C3.ai taking a backseat.
Should you consider buying Palantir shares now?
Below, I’ve compared Palantir with two competitors also aiming for a share of the AI market, particularly where government and commercial sectors intersect.
PLTR PS Ratio data by YCharts.
Palantir’s price-to-sales ratio of 114 is certainly high—even compared to previous market booms. Still, the large gap in valuation between Palantir and its peers—C3.ai and BigBear.ai—should not be misunderstood.
C3.ai may appear inexpensive, but it’s actually a classic value trap: the business is in long-term decline and losing ground to its bigger competitor.
With C3.ai’s stock sharply declining, growth-oriented investors are likely better off owning shares of a proven leader like Palantir, which continues to strengthen its relevance in both government and private sectors over the long haul.
