C3.ai CEO Stephen Ehikian Just Delivered Incredible News for Palantir Investors

Key Points

• C3.ai missed its revenue and profit forecasts for its latest quarter by wide margins.

• The company has withdrawn its fiscal year guidance.

• Palantir continues to crush its competition across both the public and commercial markets.

• 10 stocks we like better than Palantir Technologies ›

Back in January, I wrote an article that posed a straightforward question: Could artificial intelligence (AI) software vendor C3.ai (NYSE: AI) emerge as the Palantir Technologies (NASDAQ: PLTR) of 2025?

Fast-forward to Sept. 4, and the market has delivered a clear verdict. Palantir stock has surged 105% so far this year. By contrast, shares of C3.ai have plummeted by 54% and are hovering around a multiyear low. So the answer to my earlier question appears to be a decisive "no."

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But just when sentiment around C3.ai seemed like it couldn't deteriorate further, the company delivered another round of unsettling news for shareholders. And ultimately, C3.ai's weakness represents a significant win for Palantir investors.

C3.ai is a business in decline

Back in May, C3.ai released its final set of results for its fiscal 2025 (which ended April 30). At that time, it issued financial guidance for both the first quarter of its fiscal 2026 and the full year.

The table below outlines the company's previously issued guidance compared to its actual reported performance.

Data source: Investor relations.

On revenue, C3.ai fell short of the midpoint of its guidance range by more than 30%, and its operating loss was nearly twice as bad as the pessimistic end of management's forecast. Compounding the disappointment, sales not only declined sequentially (quarter over quarter), but were also lower than in the same period of the prior fiscal year.

In light of that underperformance, management withdrew its prior full-year guidance and did not provide a new outlook, leaving investors without clear expectations for C3.ai's revenue or profitability.

This only signals heightened uncertainty around the company's outlook, but also erodes management's credibility at a time when confidence is already fragile.

Image source: Getty Images.

Its troubles are fantastic news for Palantir investors

One frequent criticism leveled against both Palantir and C3.ai is that they are overly dependent on a small number of clients. To their credit, both companies have worked to expand their customer and revenue bases further.

C3.ai's sales mix has shifted meaningfully over the last few years. Back in March 2023, nearly 72% of its bookings came from companies in the oil and natural gas space, with another 16% tied to federal, aerospace, and defense customers.

More recently, the company has begun to diversify: Manufacturing, utilities, chemicals, and healthcare now represent growing portions of the portfolio. At the same time, C3.ai continues to hold a notable presence in the public sector -- with 32% of first-quarter bookings coming from state and local governments, as well as aerospace and defense.

Palantir has undergone a similar evolution in its customer mix, but the difference lies in the sheer scale and strategic importance of its contracts. The company, which got its start serving government agencies, has established a track record of securing high-profile contracts that affirm its standing as an indispensable partner across both public and private markets.

• Defense and government: In May, Palantir's Maven Smart System contract was expanded by $795 million -- bringing the total value to $1.28 billion. More recently, the U.S. Army consolidated 75 separate agreements with the company into a single contract worth up to $10 billion over the next decade. Beyond domestic government agencies, Palantir has extended its reach to international alliances -- most notably, a deal with NATO.
• Commercial expansion: On the enterprise side, Palantir works with leading names in aviation such as Archer Aviation and American Airlines.
• Strategic partnerships: Palantir has also cultivated an ecosystem of alliances with global technology and consulting leaders, including Oracle, Accenture, Amazon Web Services (AWS), Booz Allen Hamilton, PwC, Microsoft, KPMG, Databricks, and Deloitte.

These partnerships not only expand Palantir's distribution channels, but also reinforce its position as a core layer within the enterprise AI software stack.

By contrast, while C3.ai has established partnerships and secured contracts of its own, they tend to be narrower in scope and carry less strategic weight. Palantir continues to capture the flagship opportunities, leaving C3.ai competing for smaller, less influential deals. This dynamic positions Palantir as the default choice for high-stakes deployments, while C3.ai remains a secondary option.

Is Palantir stock a buy right now?

Below, I've benchmarked Palantir against two peers that are competing with it for market share at the intersection of AI and public-private deployments.

PLTR PS Ratio data by YCharts.

Palantir's price-to-sales ratio of 114 is undeniably elevated -- even when viewed against the backdrop of prior market bubbles. However, the disparity in valuation multiples between Palantir and its cohorts -- C3.ai and BigBear.ai -- should not be misinterpreted.

C3.ai may look like a bargain on the surface, but it's a classic value trap: The business is in structural decline and steadily ceding ground to its larger rival.

With C3.ai stock turning into a falling knife, growth investors would be far better served to hold shares of an established leader like Palantir, which continues to solidify its long-term relevancy across government and commercial markets.

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Adam Spatacco has positions in Amazon, Microsoft, and Palantir Technologies. The Motley Fool has positions in and recommends Accenture Plc, Amazon, Microsoft, Oracle, and Palantir Technologies. The Motley Fool recommends Booz Allen Hamilton and C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.