One Word from C3.ai’s Financial Results Conference That Should Make Investors Skeptical About the Company’s Future

Palantir Technologies (PLTR 2.02%) AND C3.ai (Artificial Intelligence 1.22%) can’t get far from each other. Both companies are developing enterprise software platforms that are rooted in artificial intelligence (AI). Additionally, public sector agencies are widely touted as users of their generative AI infrastructure.

I’ve long been a proponent of Palantir as an investment, but I’ve remained skeptical of C3.ai, which I see as mostly a speculative opportunity. And after listening to C3.ai’s recent earnings call, there was one word that really stuck out to me, making me even more suspicious of its long-term potential.

What did C3.ai say?

During C3.ai’s Q1 fiscal year 2025 press conference, which ended July 31, CTO Ed Abbo said:

The C3 AI platform was purpose-built and hardened over 15 years to rapidly deliver robust AI applications to customers. Now let me take a moment to explain what we mean by off-the-shelf applications, because that’s a key differentiator for C3 AI. As a customer, if you buy an off-the-shelf application, you don’t have to define what the application does, design and develop ontologies, business logic, AI or GenAI model pipelines, or user interfaces. We’ve done all of that.

The word that stuck with me was “ontology.” In the software lexicon, an ontology is basically a way to visually map large sets of data for easier information processing.

Why is it so important?

Given Abbo’s comment, you’d think C3.ai has been a developer of advanced ontologies for over a decade. But I went back and searched for the term “ontology” or “ontologies” in the company’s last 10 earnings calls. It came up zero times.

By contrast, rival Palantir — which has been around for about 20 years — hasn’t stopped talking about its ontologies since it went public in late 2020. Palantir even has an entire page on its corporate website dedicated to ontologies.

My spider sense kicks in when I think a company is trying to capitalize on an emerging trend by using buzzwords. C3.ai is no exception.

Summary

The charts below illustrate two starkly contrasting narratives. The top one shows that Palantir generated over $2 billion in revenue over the past 12 months. More importantly, the company has gone from a cash-burning business to one that is consistently profitable.

PLTR revenue data (TTM) by YCharts.

On the other hand, as the lower chart shows, C3.ai only generated about 13% of Palantir’s sales and its operating losses widened.

While big tech companies dominate the AI ​​market, Palantir has spotted leaders in cloud computing Microsoft AND Oracle join forces with it rather than compete with it. These opportunities represent an entirely new phase of growth for Palantir — one that could ignite further acceleration in the private and public sectors.

I think big tech companies are seeing Palantir as a serious player in the AI ​​world. Much of that perception can be attributed to the company’s impressive growth, supported by a solid set of ontological platforms.

I would caution investors against taking C3.ai’s comments too seriously at this point. At the end of the day, I think C3.ai’s progress speaks for itself.

While it is indeed growing, it pales in comparison to other mid-sized enterprise software developers. Moreover, as it continues to burn cash, it is hard to imagine how C3.ai could catch up with the likes of Palantir.

I think C3.ai and its management team are doing everything they can to stay relevant – other than the ticker symbol “AI,” of course. I think management’s use of the term “ontology” is a bit desperate, and really just an overzealous tactic to be seen and heard as the AI ​​revolution unfolds.

Adam Spatacco has positions in Microsoft and Palantir Technologies. The Motley Fool has positions in and recommends Microsoft, Oracle, and Palantir Technologies. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.