Analyst(s): Nick Patience
Publication Date: August 14, 2025
The Futurum Group shares insights on the starkly contrasting recent performance of AI platform providers Palantir and C3.ai. While both companies offer platforms for building AI applications, Palantir’s stock and financial results are on an upward trajectory, whereas C3.ai has faced significant challenges, highlighting fundamental differences in their market strategy and execution.
What is Covered in this Article:
- The recent financial results and stock performance of both Palantir and C3.ai, both purveyors of AI platforms.
- A comparison of their business models, particularly the role of professional services in powering their AI platforms.
- Insights into Palantir’s successful acquisition of government and commercial contracts.
- C3.ai’s recent challenges, including missed revenue targets and its search for a new CEO.
- Concluding thoughts on the future trajectories of both companies within the highly competitive AI platforms market.
The News: Palantir and C3.ai, two prominent players in the enterprise AI platform market, are experiencing dramatically different fortunes. Palantir has become a Wall Street favorite, reporting strong revenue growth, consistent profitability – and a resulting surging stock price – fueled by significant contract wins in its traditional government sector and a rapidly expanding commercial segment. The company has successfully messaged its ability to deliver tangible results through its Foundry and AIP platforms, leading to broader market adoption.
In sharp contrast, C3.ai—the owner of the ‘AI’ stock symbol—has struggled. Late on Friday, August 8, the company announced catastrophic preliminary first-quarter results that fell 33% below guidance, with revenue projected to decline 19% year-on-year. The announcement raised serious questions about its sales strategy, customer acquisition costs, and the overall market appetite for its consumption-based pricing model.
If AI Is So Hot, Why Is Palantir Soaring While C3.ai Is Stumbling?
Analyst Take: The divergence between Palantir and C3.ai offers a critical lesson in the enterprise AI market: a powerful platform is not enough. One key differentiator is the successful integration of technology with a service and go-to-market model that delivers clear, repeatable value to customers. Another is the ability to tell a convincing story to the market. Despite both companies having charismatic CEOs – sadly, C3’s Tom Siebel announced late July he was stepping down due to health problems – Palantir’s CEO Alex Karp proved better at spinning a story that it was the best way for governments and large enterprises to leverage AI to improve their operations. This is where the Palantir vs. C3.ai divergence becomes most apparent. Palantir has mastered the art of the ‘land and expand’ model, embedding its platforms deep within customer operations, driven by a highly skilled forward-deployed engineering team that essentially acts as elite consultants. While this is a professional services-heavy approach, it has proven incredibly sticky and effective, as reflected in its soaring stock price.
Speaking of professional services, while both companies claim to be primarily software platforms, there is a fair bit of hands-on consulting to get their respective software platforms to work. In its fiscal year ending April 30, 2025, C3.ai received 84% of its $389.06 million revenue from software and 16% from professional services. In 2022, short sellers accused C3 of reclassifying one-off consulting as subscription revenue, which C3 denied. Meanwhile, Palantir doesn’t disclose on this basis; instead, its reporting segments are based on customer type: US government and US commercial. In Q2 2025 – its first $1 billion+ revenue quarter – Palantir derived 42.4% of revenue from US government work, 30.5% from US commercial, and 27.1% from the remainder.
Palantir’s Winning Formula
Palantir’s success stems from its ability to solve complex, high-value problems for large organizations. It doesn’t just sell software; it sells a solution, with its engineers working hand-in-hand with clients to build out applications on Foundry. This has created deep, long-lasting relationships and a proven track record, first within the opaque world of government intelligence and now increasingly in the competitive commercial sector. Its five-day ‘AIP Bootcamps’ have been a strategic masterstroke, allowing potential customers to see the platform’s power firsthand, accelerating sales cycles, and proving its value proposition. The result has been soaring commercial revenue, sustained profitability, and a stock that has rewarded investors handsomely.
C3.ai’s Uphill Battle
C3.ai, on the other hand, is in the midst of an operational crisis. The company’s recent, dramatic revenue miss signals deep-seated execution problems. The company’s reliance on a consumption-based pricing model, which C3 switched to in 2022, was to smooth out lumpy sales cycles of deals that were typically multi-year contracts and reduce uncertainty as to when those deals would close. However, the consumption model has created unpredictability for both clients and investors, especially in an uncertain economic climate where businesses are scrutinizing budgets. The disastrous preliminary results, which Siebel called “completely unacceptable,” and subsequent stock collapse have erased investor confidence and intensified pressure on the company. The ongoing search for a new CEO now takes on even greater urgency. The core issue for C3.ai has been its inability to demonstrate value in the same way Palantir has consistently. The Palantir vs. C3.ai divergence is not just about technology but the business and service wrapper enabling customer success. C3.ai needs a radical overhaul of its go-to-market strategy to prove it can solve business problems and deliver transformative results.
Share Price Performance: A Tale of Two Tickers
Figure 1: Palantir & C3.ai Year-to-date Share Price Performance
The stock market’s verdict on their divergent paths is unequivocal. Year-to-date in 2025, Palantir’s (PLTR) stock has been a standout performer, soaring 148%. This incredible run reflects strong investor confidence fueled by blowout earnings and a rapidly growing U.S. commercial business. In the last three months alone, the stock is up over 57%.
Conversely, C3.ai’s (its AI on the) stock has cratered. Following its disastrous preliminary Q1 revenue announcement in early August, the stock plummeted. Year-to-date, the stock is down over 51%, and it has lost more than 36% of its value in the last month. This starkly illustrates the market’s loss of confidence and the severe penalty for failing to execute in the high-stakes AI sector.
Valuation Ratios: A Stark Contrast in Confidence
A look at key valuation ratios starkly illustrates the market’s divergent confidence in the two companies. Palantir’s high valuation is evidenced by a trailing Price-to-Earnings (P/E) ratio of approximately 520 and a Price-to-Free-Cash-Flow ratio near 230. These premium multiples signal strong investor expectations for sustained, profitable growth. In contrast, C3.ai’s lack of profitability and negative free cash flow render both its P/E and Price-to-Free-Cash-Flow ratios meaningless. A more direct comparison can be made using the Price-to-Sales (P/S) ratio, a common metric for valuing growth companies. Here, the chasm is clear: the market values each dollar of Palantir’s revenue 19 times higher than C3.ai’s, with Palantir boasting a P/S ratio of 114 compared to C3.ai’s 6. This vast valuation gap underscores the premium investors will pay for Palantir’s proven execution versus the deep skepticism surrounding C3.ai’s recent performance.
What to Watch:
- The coming year will be pivotal for both companies. For Palantir, the key will be to sustain its commercial growth momentum and prove that its high-touch model can continue to scale profitably against a lofty valuation. Competitors will not stand still, and Palantir must continue to innovate on its platform to maintain its edge.
- For C3.ai, the focus will be on crisis management and the subsequent strategic overhaul under new leadership. Watch for immediate changes to its sales process and pricing model to stabilize the business and regain some semblance of market trust.
- Competition abounds for both companies, from the established government contractors, large global systems integrators, major cloud providers, modern data and AI platform companies and others.
See the latest results from Palantir and C3’s recent announcements on their respective websites.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Nick Patience is VP and Practice Lead for AI Platforms at The Futurum Group. Nick is a thought leader on AI development, deployment, and adoption - an area he has researched for 25 years. Before Futurum, Nick was a Managing Analyst with S&P Global Market Intelligence, responsible for 451 Research’s coverage of Data, AI, Analytics, Information Security, and Risk. Nick became part of S&P Global through its 2019 acquisition of 451 Research, a pioneering analyst firm that Nick co-founded in 1999. He is a sought-after speaker and advisor, known for his expertise in the drivers of AI adoption, industry use cases, and the infrastructure behind its development and deployment. Nick also spent three years as a product marketing lead at Recommind (now part of OpenText), a machine learning-driven eDiscovery software company. Nick is based in London.
