1 Top Artificial Intelligence (AI) to Buy Hand Over Fist Before It Is Too Late

Share prices of C3.ai (NYSE: AI) gained more than 20% in the May 29 trading session following the release of the company's fiscal 2025 fourth-quarter results the afternoon prior. That should not have been surprising, as the enterprise artificial intelligence (AI) software provider has been capitalizing on the fast-growing adoption of this technology by both commercial and government customers.

The company was well-placed to deliver stronger-than-expected results for the quarter (which ended on April 30), and that's precisely what happened: Its top and bottom lines were better than analysts' consensus estimates.

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Let's look at the reasons why C3.ai stock is on fire right now and check why it may be a good idea for investors to buy it right away.

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C3.ai's contract wins should lead to stronger growth

C3.ai booked $389 million in revenue in its fiscal 2025, an increase of 25% from the previous year. Management forecasts an increase of 20% in the current fiscal year at the midpoint of its guidance range. While that points toward a slower rate of growth, there is a strong possibility that C3.ai will end up delivering faster growth than that this year.

That's because the company's generative AI software solutions have gained impressive traction among customers, which is evident from the contracts that it has been signing of late. C3.ai announced that the U.S. Air Force has signed an incremental contract worth $350 million. The updated contract -- worth a total of $450 million -- runs through October 2029, with C3.ai providing an AI-powered predictive maintenance platform for monitoring components in real time across several types of aircraft.

It is worth noting that C3.ai closed 51 agreements with government customers last year and also expanded its existing deals with current customers, which include the Army and the Navy. Meanwhile, the company's strategy of offering its generative AI applications through cloud computing giants such as Microsoft, Amazon, and Alphabet's Google is also paying off. It closed a total of 193 agreements through its partner channel, an increase of 68% from the preceding year.

Even better, C3.ai points out that its 12-month potential sales pipeline through its cloud partner network has increased by 37%, suggesting that it is likely to land more business in the future. Also, its generative AI solutions were in the initial deployment phase at 36 customers at the end of the previous quarter. Given that C3.ai's customers tend to expand their partnerships with the company over time, it won't be surprising to see these clients boost the size of those contracts beyond what the initial deployments called for.

In short, the stage seems set for C3.ai to clock stronger growth in the future, and this is exactly what analysts expect.

Data by YCharts.

Its valuation is still on the affordable side

C3.ai's underperformance on the stock market so far this year means that investors can buy it at an attractive level right now. It is trading at just under 9 times sales, which is quite cheap when we consider that its closest peer, Palantir, trades at 105 times sales.

Assuming C3.ai's growth indeed accelerates over the next three fiscal years, and it achieves the $705 million in revenue that analysts project, if it's still trading at its current sales multiple, its market cap would have jumped by 77% to $6.2 billion.

So, investors looking to add a top AI stock to their portfolios that's trading at attractive levels and capable of delivering healthy long-term gains should consider buying C3.ai. Its newfound momentum seems sustainable for a long time to come.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Palantir Technologies. 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.