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Better Artificial Intelligence Inventory: Palantir vs. C3.ai


Each tech corporations are capturing clients hungry for his or her AI options.

Artificial intelligence (AI) holds unimaginable potential to vary industries. Some have likened AI to the most important transformational expertise for the reason that web.

Loads of corporations try to capitalize on AI’s secular trend. Two are Palantir Applied sciences (PLTR 2.98%) and C3.ai (AI 1.12%). The previous makes use of AI to derive insights from knowledge, and the latter offers organizations with turnkey and customized AI software program.

The AI market is anticipated to develop quickly from a projected $184 billion this yr to $827 billion by 2030. Given this progress, is Palantir or C3.ai the higher AI funding for the lengthy haul? Here is a take a look at every to succeed in a conclusion.

The case for Palantir

Palantir has been serving to the U.S. authorities analyze knowledge since 2003, however it simply launched its synthetic intelligence platform (AIP) in 2023. With its inception, AIP helped to spur the enlargement of Palantir’s non-government enterprise.

Within the second quarter, Palantir skilled 33% year-over-year gross sales progress to $307 million in its business division. This contributed to the agency’s Q2 revenue reaching $678 million, a 27% leap up from the earlier yr.

Not solely is Palantir’s income rising, however its monetary well being can be wonderful. It exited Q2 with a internet earnings of $135.6 million, up from $27.9 million in 2023. It additionally boasted Q2 adjusted free cash flow (FCF) of $149 million, a rise from the prior yr’s $96 million.

AIP efficiently attracted business clients as a result of the platform allows companies to go from an AI idea to real-world implementation in as little as just a few days. This skill isn’t any small feat, and in accordance with Palantir’s CTO, Shyam Sankar, “therein lies our total alternative available in the market.”

As a follow-up to AIP’s success, Palantir launched a brand new product constructed on AIP referred to as Warp Pace. This resolution is supposed to handle bottlenecks within the manufacturing business by leveraging AI to enhance provide chains and a company’s manufacturing processes.

If Palantir can efficiently deal with this large market, which represented practically $3 trillion in U.S. gross domestic product (GDP) final yr, it may essentially remodel its fortunes.

A take a look at C3.ai

C3.ai started in 2009 as an vitality administration firm and transitioned to AI software program in 2019. Its vitality business roots enabled the agency to type a three way partnership with vitality big Baker Hughes to ship AI tech to the oil and gasoline sector. This allowed C3.ai to seize clients akin to Shell and ExxonMobil.

C3.ai’s software program platform can deal with numerous conditions the place AI may also help a enterprise, akin to fraud detection for banks. The corporate generated 84% of its income from subscriptions in its 2025 fiscal first quarter, which ended July 31. The rest got here from companies akin to coaching and buyer assist.

AI demand led to fast income progress for the corporate. In its fiscal Q1, gross sales hit $87.2 million, a 21% year-over-year enhance. This extends the double-digit income progress C3.ai loved in its 2024 fiscal yr when gross sales reached $310.6 million, a 16% year-over-year enhance.

The agency additionally produced Q1 FCF of $7.1 million, a considerable enchancment over the prior yr’s unfavourable FCF of $8.9 million. But, C3.ai will not be worthwhile. Its Q1 internet loss totaled $62.8 million.

As well as, the corporate’s partnership with Baker Hughes is contracted to finish in April 2025. This can be a key relationship for C3.ai, with some estimates suggesting Baker Hughes accounts for over a 3rd of C3.ai’s income.

Deciding between C3.ai and Palantir

Selecting Palantir or C3.ai as the higher funding is not simple. Whereas each get pleasure from sturdy income progress, C3.ai’s lack of profitability would appear to make Palantir the higher AI enterprise to spend money on. But, Palantir’s success drove up its inventory value, with shares skyrocketing over 150% previously 12 months.

At this level, the agency’s shares look fairly expensive when evaluating its price-to-sales (P/S) ratio to C3.ai. The P/S ratio tells you ways a lot buyers should pay per share for a greenback’s price of income.

PLTR PS Ratio Chart

Information by YCharts. PS Ratio = price-to-sales ratio.

Wall Avenue agrees. The consensus amongst Wall Avenue analysts is a “maintain” ranking with a median share price target of $28 for Palantir inventory. On condition that shares commerce for round $43 on the time of this writing, Wall Avenue’s value goal signifies a perception that Palantir shares are overpriced.

That stated, C3.ai is way from a purchase. Like Palantir, the consensus amongst Wall Avenue analysts is a “maintain” ranking for C3.ai inventory, with a median share value goal of $22.

Including to that is uncertainty across the renewal of C3.ai’s partnership with Baker Hughes. Consequently, any resolution round shopping for C3.ai shares needs to be delayed till this partnership state of affairs is resolved.

If not for Palantir’s sky-high valuation, it could be the higher AI funding over C3.ai, given its superior financials and AIP’s success and future potential with Warp Pace. However at the moment, it is best to attend for a drop in Palantir’s share value earlier than deciding to purchase.



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