Can C3.ai Become the Next Palantir Technologies?

Palantir Technologies (NASDAQ: PLTR) stock has been an incredible investment over the past few years. If you bought it at the start of 2023, you're up just over 3,000%. If you were slightly late to the party and bought at the start of 2024, you're up roughly 1,060%. If you ignored all sentiment about Palantir rising too far too fast and bought at the start of 2025, congratulations, you're up over 164%. There have been very few stocks that have outperformed Palantir over the past three years, but are starting to wonder if the run is nearing an end and are searching for Palantir alternatives.

One alternative that some investors are taking a close look at is C3.ai (NYSE: AI). On the surface, its business model is quite similar to Palantir's, as it offers AI solutions to government and commercial clients alike. It also has a $2.5 billion market cap right now, which is smaller than Palantir's when its monster run began at the start of 2023. If C3.ai's stock takes off like Palantir's did, it could provide investors with life-changing returns.

It would be a huge win if C3.ai could transform into the next Palantir, but can it?

Image source: Getty Images.

C3.ai is going through some turmoil

C3.ai's stock hasn't been very successful. Despite gaining traction at the start of 2023, similar to Palantir, it hasn't had nearly the same success. The stock is down over 90% from its all-time highs, and is nearly at the same price it was at the start of the artificial intelligence arms race.

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Data by YCharts.

C3.ai offers pre-built AI products for a variety of industries, giving clients the ability to plug-and-play AI solutions to increase business efficiency and productivity. With nearly every upper management team discussing how they can implement AI to improve their business, C3.ai should be having a field day in the current market environment. But it's not.

During Q1 FY 2026 (ending July 31), C3.ai reported revenue of $70.3 million. That revenue declined 19% year over year from $87.2 million during Q1 FY 2025. That's a terrible sign for the business, and it raises immediate red flags.

Additionally, C3.ai recently announced a new CEO after its previous CEO and founder had some health issues arise. Its new CEO, Stephen Ehikian, was President Donald Trump's acting head of the U.S. General Services Administration (GSA) at the start of 2025, but he took this role instead. His association with Trump may come in handy for C3.ai and its pursuits to win more government businesses, but Ehikian will have to execute a huge turnaround if the company wants to entice investors back.

If Ehikian can right the ship, could C3.ai be poised for monstrous gains?

The market has no faith in C3.ai

Following the sell-off, C3.ai's valuation is relatively low. It trades at 6.3 times sales, which is well below the 10 to 20 times sales most software companies tend to trade at.

Data by YCharts.

Should the new CEO turn the company's business around, C3.ai could have a ton of room to run. Palantir's stock is outrageously valued at 135 times sales right now. The fact that the stock price keeps rising shows how highly the market values a competent AI company that's rapidly growing.

C3.ai has a long road ahead of it and has already dug itself a massive hole by falling behind in the critical first three years of the AI buildout. It can always catch up, but it has its work cut out for it. C3.ai could become the next Palanir if everything goes right, but there's enough going wrong right now that I'm willing to stay patient and watch and see what happens for a few quarters before deciding to invest.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.