Why Shares of C3.ai Stock Collapsed In 2025
Key Points
C3.AI is seeing declining sales despite the AI revolution.
Its founder and CEO had to retire last year due to a medical condition.
The company is wildly unprofitable.
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Shares of C3.ai (NYSE: AI) fell 61% in 2025, according to data from S&P Global Market Intelligence. The artificial intelligence (AI) company builds custom software applications for large enterprises, and is struggling to compete with the likes of Palantir Technologies and other players in the space. In 2025, it lost its CEO, saw declining revenue, and rising operating losses.
The stock is now down 92% from all-time highs. Here's why C3.ai fell yet again in 2025.
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Lost CEO, declining sales
Spending on AI software is growing like gangbusters. C3.ai is failing to benefit from this rising tailwind. Last quarter, its revenue declined 14% year-over-year to $71 million, with a hefty operating loss of $112 million. The company is spending a boatload of money on sales, marketing, and product development, but failing to win new customer contracts to drive sales higher.
On top of terrible revenue figures, C3.ai founder and CEO Thomas Seibel was forced to retire due to a medical condition last year, adding further uncertainty to the company. Even though this business appears tailor-made for the AI revolution -- it even has 'AI' in its name -- there has been a failure to execute in the business applications field.
Compare that to Palantir, which is growing revenue at a rapid clip with expanding profit margins at a much larger scale than C3.ai. It is clear what companies are winning the competition for AI enterprise tools, and it is not C3.ai.
Image source: Getty Images.
Should you buy C3.ai stock?
When C3.ai made its market debut in 2021, it had an absurdly high price-to-sales ratio (P/S) of 90. That has since fallen due to the company's long-term revenue growth (although that has reversed in 2025) and the price collapsing 90% from its highs. As of this writing, C3.ai stock has a P/S of 5.3.
This may seem more palatable, but investors need to ask whether this company will ever turn a profit. Revenue is now moving in the wrong direction despite a massive industry tailwind, along with massive operating losses. Shares outstanding are up 46% since going public, which will be a shareholder dilution headwind for long-term stock price returns.
AI is a highly sought-after category at the moment, but C3.ai falls short of living up to the hype. It is not surprising to see the stock down in 2025, and it should fall further in 2026.
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Brett Schafer 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.
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