How C3.ai maintains its “leadership” in the AI sector: CEO

Shares of C3.ai (AI) are rising on Thursday after the company shared fourth-quarter results, reporting 20% year-over-year revenue growth and fiscal 2025 revenue guidance that exceeded expectations. The company’s results are the latest signal of strong demand in the AI sector.

C3.ai President and CEO Tom Siebel joins Morning Brief to discuss the demand for AI software and balancing energy needs.

“This is the largest market we have seen in the history of enterprise application software. The game we are playing at C3.ai is to see if we can establish and maintain leadership in the global market. And that’s what we aim to do. We invest in development. We invest in technology. We invest in customer service. This is reflected in the increase in subscription revenues last quarter. year over year,” Siebel tells Yahoo Finance.

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This post was written by Nicholas Jacobino

Video transcription

We are seeing more evidence of power in the AI trade. C three AI, the latest company to cause madness here.

The company’s full-year guidance for 2025 exceeds expectations. Fourth-quarter revenue increased 20% year-over-year, boosted by subscription revenue.

All of this pushed the stock higher this morning as we track the stock’s 12% gain here and more on the results.

We have this man behind the curtain.

Tom Siebel, president and CEO of C3 AI, always, I mean office goals are lit here every time, Tom.

Uh, we need to talk about this quarter.

What is the current demand for AI products, and C3 AI in particular, compared to the rest of the industry, as it has been one of the broader thematic industries for most of the year.

Hmm, well, we see demand for AI infrastructure, demand for AI applications, but it’s just staggering.

I mean, look what’s happening with NVIDIA.

Oh, those chips. The reason people buy these chips is to run enterprise AI applications, and that’s what we do.

So I think there is some pressure in the software market.

I think in many ways AI can be a tailwind for the software market, but for what we do, it’s definitely a tailwind.

The demand for AIA I generative applications and defense intelligence, manufacturing, um, financial services is just huge. Tom, talk to us a little bit more about where you see this increase in demand and the opportunity to then increase your market share with one of the larger players in the space.

And ultimately, what will this help with some of the growth in subscriptions, which is very important here to see the three A’s.

Well, I mean, it’s a market share game.

We are in the early stages of an addressable software market that is expected to be worth over a trillion dollars.

By the time we become generative AI, it could be several trillion.

So this is the largest market we’ve seen in the history of enterprise application software.

The game we are playing at C Three AI is to see if we can establish and maintain leadership in the global market.

And oh, that’s what we do.

We invest in growth, we invest in technology, we invest in sales, we invest in customer service and it is visible in the increase in subscription revenues last quarter.

Year over year it is 41%.

Pretty good result, Tom, maybe that’s reading too much into things, but especially on the operational side of the business when you think about the amount of additional data center space that companies like yours would need to be able to make sure that they re-take, to keep up with demand.

This is what I would see as rising costs.

How do you manage expenses in the face of increased demand?

Uh, we’re finding that hyperscaler is keeping up with our customer demand.

So I don’t think there is a silicon shortage.

I don’t think there is a lack of infrastructure.

Well, we may actually experience a power shortage.

Uh, believe it or not, I think this is, you know, this is a key issue because as this market grows in the next decade, there’s not enough capacity to power these data centers.

So we need to think about this.

And Tom, before we let you go, when you talk about some demand, exactly where it’s coming from.

Uh, the federal side of things that I really liked, 50% of the bookings came from federal defense and aviation.

So there’s something that you’ve asked a few times here in the conversation, what is that capacity for growth or opportunity, particularly within the federal government?

What does this look like with C3 AI, well, it’s astounding and, you know, as we get into the defense intelligence community, we’re at war with China, uh, in the application of AI to, you know, hypersonics, logistics in question predicted maintenance readiness, whatever it may be.

So we are honored to serve in the Air Force, Marine Corps and intelligence service.

And we’re, you know, we’re, we’re, we’re happy with that.

That is, this market has grown.

I think revenues are over 100% year over year.

And we believe that these investments are continuing.

Now that we get to the federal civilian sector, let’s look at Health and Human Services and the Veterans Affairs Administration.

There is a huge opportunity for generative AI to enable these people to improve service and benefit programs for the American public.

So, you know, the defense budget might be around 800 billion.

You get into health care and human services, social security, you now have, you know, a larger than $2 trillion annual budget.

So they’re making huge investments in these technologies in the future, and we hope that we can participate in them by providing better services to the American public.

Tomek, it’s always nice to talk to you.

Thank you very much for your insight into this place.

Make time for us this morning.

The share of C three AIs in the early phase of the action increased by almost 12%.

Tomek Zel.

Thank you very much.

Thank you.