Wall Street is famous for sometimes overly punishing excellent companies that go through temporary, difficult periods. Over the longer term, investors have made tremendous profits by buying the shares of such firms on weakness.
There’s a great deal of evidence indicating that C3.ai (AI), which develops and implements AI-based software, is in the latter category. Specifically, in light of the company’s strong leadership team, proven technology, constructive, recent changes, its attractive sector, and its enticing valuation, long-term growth investors may want to consider purchasing AI stock.
Why the Street Soured on C3.ai
After the company reported in August that its revenue had tumbled sharply during its fiscal first quarter that ended in July, AI stock plunged, sinking 22% between the trading day before the negative preannouncement and September 17.
According to UBS, the large Swiss bank, C3.ai’s miss was primarily caused by “execution failures around several large deals instead of broad-based customer weakness.”
Executive Chairman and founder Tom Siebel blamed the company’s poor performance on “poor sales execution and poor resource coordination,” along with his own “health issues” which caused him to have “significant visual impairment.” Siebel, who was the firm’s CEO until July 2025, explained that his lack of attention to its “sales processes” as a result of his illness had undermined the firm’s performance in Q1.
A Strong Leadership Team and Proven Technology
Founded by Siebel in 1993, Siebel Systems, which marketed sales force automation products, generated “tremendous growth” before it was sold to Oracle (ORCL) for a huge $5.8 billion in 2006.
And C3.ai’s new CEO, Stephen Ehikian, launched two firms that became core parts of Salesforce (CRM), before becoming Acting Administrator of the U.S. General Services Administration recently. The connections that he made in the latter role should help him obtain meaningful government deals for C3.ai.
Among C3.ai’s huge customers are oil giant Shell (SHEL), Bank of America (BAC), Nucor (NUE), a large steelmaker, the U.S. Army, the U.S. Air Force, and Huntington Ingalls (HII), a major ship builder for the Pentagon.
Additionally, as of the end of its Q1, C3.ai had a huge total of 266 active initial production deployments or IPDs, 28 of which were signed during Q1. These agreements have either been started, extended beyond their original term of three to six months, have become long-term deals or C3.ai is in talks about extending them.
Given AI’s huge customer base and its impressive, large customers, I believe that its technology and products have been fully validated.
Constructive Changes and a Rapidly Growing Sector
In addition to recruiting Ehigian, whose resume is quite impressive, C3.ai hired “new, highly experienced leadership across the board” for its sales and services teams, Siebel reported.
Further, in June, AI tapped Rob Schilling as its Chief Commercial Officer. In this role, Schilling will head the company’s sales and service organizations. Prior to joining C3.ai, he worked for Oracle, holding “a senior leadership position focused on growing the company’s cloud enterprise sales applications.” Since Oracle is, in general, a highly successful, impressive firm, and its cloud business has performed particularly well in the past several years, there’s a good chance that Schilling is a top-notch leader and will succeed in this crucial role.
Meanwhile, according to one estimate, the global AI software market is expected to surge from $174 billion this year to $467 billion in 2030, representing a compound annual growth rate of 25%. And of course, it’s well-known that a huge number of companies and government agencies are seeking to rapidly expand the extent to which they utilize AI, so C3.ai has a tremendous opportunity to generate tremendous growth which should enable it to become profitable over the long term.
Valuation and the Bottom Line on AI Stock
C3.ai has a rather low price-to-book ratio of 3.1. And as Siebel pointed out during the firm’s last earnings call, many impressive companies, including Oracle, Nvidia (NVDA), and Amazon (AMZN) have reported quarterly results that disappointed Wall Street, before going on to impress investors a great deal over the longer term.
There are many reasons to believe that C3.ai will follow in their footsteps.
*This article is intended to be informational only; it is not financial advice.
