C3.ai’s stock drops 25% despite 26% revenue jump
C3.ai is facing pressure as its stock dives 25% in 2025, even though the company posted record $108.7 million revenue in Q4, up 26% year-over-year. The full fiscal year sales hit $389.1 million, growing 25% over last year.
The issue started with CEO Tom Siebel’s health problems forcing a leadership search. Siebel will remain as executive chairman, but his exit has rattled investors. 
Despite revenue growth, the company isn’t profitable. It reported an operating loss of $324.4 million in fiscal 2025, slightly worse than the prior year’s $318.3 million loss. Rising costs from hiring added pressure.
C3.ai’s partnerships with Microsoft and Baker Hughes helped close 73% of new deals in fiscal 2025. Government contracts remain strong — the U.S. Air Force expanded its contract from $100 million to $450 million in May for predictive aircraft maintenance.
The company insists it’s trimming costs and aims to hit free cash flow positive by 2026. It ended fiscal 2025 with negative free cash flow of $44.4 million, improving from $90.4 million the year before. Its balance sheet holds $742.7 million in cash and short-term investments against $187.6 million liabilities.
C3.ai forecasts fiscal 2026 revenue between $447.5 million and $484.5 million.
The stock’s price-to-sales ratio has plunged from late 2024 peaks, now sitting well below Microsoft’s.
This combo of strong sales growth, solid cash reserves, and improving free cash flow points to a tempting buy opportunity — if investors can stomach the CEO transition risk.
Image source: Getty Images.
Robert Izquierdo has positions in Broadcom, C3.ai, Microsoft, and Nvidia. The Motley Fool recommends Microsoft, Nvidia, Broadcom, and C3.ai.
