1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $35 and Hold for the Long Run

According to a 2024 study by McKinsey and Company, 72% of businesses have adopted artificial intelligence (AI) in at least one business function. However, a mere 8% are using it in five functions or more, which indicates most businesses are still in the experimental phase of adoption.

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While the cost to develop AI is coming down (as highlighted by the DeepSeek saga), it still requires significant financial resources, not to mention expertise. C3.ai (NYSE: AI) is an enterprise AI company trying to bridge that gap for its business customers by offering more than 130 ready-made applications to help them accelerate their adoption of AI.

C3.ai stock is trading 80% below the all-time high it set during the tech frenzy of 2020, but its valuation is starting to look attractive, especially in light of the company's accelerating revenue growth. Here's why investors with a spare $35 might want to consider buying a share in this AI powerhouse.

Accessible AI for businesses in every industry

C3.ai serves businesses in industries spanning financial services, manufacturing, healthcare, transportation, and oil and natural gas. Many of them aren't normally associated with cutting-edge technologies, which is why they turn to third parties like C3.ai for help. The company says that within three to six months of an initial client briefing, it can deliver a functional AI application that's capable of tackling a specific business problem.

Deployment is also simple. Most businesses use a major cloud services provider to manage their digital operations, so C3.ai has made its applications accessible through leading platforms like Microsoft Azure and Amazon Web Services. This strategy also allows C3.ai to leverage the enormous computing power those platforms offer to give its customers the performance they need to successfully deploy AI.

Oil and natural gas giant Shell, for example, has more than 100 AI applications at various stages of development, which it uses to monitor more than 10,000 pieces of equipment to prevent catastrophic failures. It even uses C3.ai's Real Time Production Optimization app to improve efficiency at its liquefied natural gas facilities, which has driven a significant reduction in carbon emissions. This is just one example of how a business is optimizing its operations with the help of C3.ai.

The company's reach could expand significantly in the near future thanks to a new strategic partnership with Microsoft Azure, which will run until 2030. It will help Azure customers accelerate their adoption of C3.ai's applications, and Microsoft will even subsidize pilot programs to help them get set up.

Revenue growth is accelerating

Two and a half years ago, C3.ai decided to switch from a subscription-based revenue model to a consumption-based model instead. This eliminated lengthy contract negotiating processes and allowed clients to sign on with it far more quickly because they only pay for what they use.

The transition initially caused a sharp decline in C3.ai's revenue growth -- an outcome management fully expected -- because it took time for consumption to scale up. However, the goal was to drive much faster revenue growth over the long term, and that is exactly what's happening right now.

C3.ai delivered a record $94.3 million in revenue during its fiscal 2025 second quarter (which ended Oct. 31), which was a 29% increase from the prior-year period. It was the seventh consecutive quarter that its growth rate had accelerated.

Image source: C3.ai.

C3.ai continues to lose money on the bottom line, primarily because it's spending heavily on research and development to expand its product portfolio and marketing to attract new customers.

The company lost $128.8 million through the first six months of its fiscal 2025, which was only a slight improvement from its $134.1 million net loss in the prior-year period.

But its results were significantly better on a non-GAAP basis, excluding one-off and non-cash expenses like stock-based compensation. By that measure, C3.ai's adjusted net loss for the first six months of fiscal 2025 was only $14.7 million.

The company has more than $730 million in cash and marketable securities on its balance sheet, so it can afford to run losses for a few more years, but investors should look for continuing declines in those losses to signal a healthy trend toward profitability.

C3.ai stock looks cheap relative to its history

C3.ai went public in late 2020 amid a frenzy in the stock market driven by pandemic-related stimulus from both the U.S. government and the Federal Reserve. Its stock peaked at $161 that year, with its price-to-sales (P/S) ratio topping 80 -- an unsustainable valuation.

Despite recently climbing from its 52-week low, C3.ai stock is still down 80% from that record high. That decline, combined with the company's steady revenue growth since then, has pushed its P/S ratio down to a more reasonable 11.2. That is actually a discount to its long-term average of 16.

AI PS Ratio data by YCharts

C3.ai CEO Thomas Siebel calls AI a mega-market event similar to the inventions of the internet and the smartphone. He believes it will create a staggering $1.3 trillion market opportunity for C3.ai (citing research by Bloomberg), so the company's current revenue is barely a drop in the bucket by comparison.

Combine that enormous addressable market with C3.ai's accelerating growth and attractive valuation, and I think its stock is a no-brainer buy for the long term.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends 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.