Two AI Stocks Poised to Overtake C3.ai's Valuation by 2027: Here's Why

The race for AI-driven cloud infrastructure dominance is intensifying, and while C3.ai (AI) remains a household name in the space, two lesser-known peers—Applied Digital (APLD) and DigitalOcean (DOCN)—are primed to surpass its valuation by 2027. Both companies benefit from stronger growth trajectories, more sustainable profitability, and strategic advantages that C3.ai's concentrated client base and persistent losses cannot match. Here's why investors should look beyond AI's hype and toward these under-the-radar opportunities.

The C3.ai Conundrum: Growth Slows, Profits Elude

C3.ai's $3.5 billion market cap (as of April 2025) is already under pressure, with analysts predicting it could dip to $3.3 billion by 2027 if valuation multiples compress. Despite a 25% revenue surge in fiscal 2025 to $389 million, the company's growth is decelerating: it expects only 15–20% revenue growth in 2026. Even worse, C3.ai remains stubbornly unprofitable, with a GAAP net loss of $(2.24) per share in 2025.

The problem? Overreliance on a handful of federal contracts, including a $450 million deal with the U.S. Air Force, and heavy spending on AI services that sap margins. Meanwhile, its valuation multiple—currently 7.5x sales—appears unsustainable for a company with no clear path to profitability.

Applied Digital (APLD): Data Centers and Dividends

Applied Digital's $3 billion market cap is just the starting line. Analysts see it surpassing C3.ai by 2027 if its data center expansion and REIT transition succeed. The company's recent deals—like $7 billion in revenue from 15-year leases with CoreWeave—position it as a critical infrastructure player in the AI boom.

APLD's move to a REIT structure (requiring 90% of taxable income to be paid as dividends) is a double-edged sword. While it could attract income-focused investors, the payout mandate may crimp retained earnings. However, the $200 million equity raise for new data centers in South Dakota and Iowa suggests management is doubling down on growth.

The 48% compound annual growth rate (CAGR) projected for APLD through 2027 dwarfs C3.ai's 19% CAGR. Even after factoring out its cloud infrastructure segment (which it plans to sell), APLD's core data center business remains a growth engine.

DigitalOcean (DOCN): Profitability and Scalability

DigitalOcean's $2.7 billion valuation is an undervalued gem. Unlike C3.ai, DOCN is firmly profitable, with a 70% non-GAAP gross margin and a $6.6 billion market cap target by 2028 if its valuation multiple expands to 5x sales. The company's secret? A focus on mid-market cloud users, including 600,000+ customers, and strategic acquisitions like Cloudways and Paperspace.

DOCN's $140 million in free cash flow (projected for 2025) gives it the flexibility to scale AI workloads, including GPU servers, without diluting shareholders. Its niche in affordable, developer-friendly cloud services makes it a potential acquisition target for giants like AWS or Microsoft—a catalyst that could supercharge its valuation.

Why These Stocks Will Outrun C3.ai

The case for APLD and DOCN isn't just about growth—it's about risk-adjusted value. C3.ai's valuation is a house of cards built on high multiples and federal contracts, while APLD and DOCN have tangible assets (data centers) and recurring revenue models.

• APLD's Catalysts: CoreWeave lease revenue, REIT dividend payouts, and new data center openings.
• DOCN's Catalysts: Expansion into AI/ML workloads, margin expansion, and potential M&A activity.

The Bottom Line: Buy the Undervalued, Sell the Overhyped

Investors seeking AI exposure should pivot away from C3.ai's speculative valuation and toward APLD and DOCN. Applied Digital's data center bets and REIT transition offer a steady revenue stream, while DigitalOcean's profitability and scalability make it a safer bet for long-term gains.

Action Items:
- APLD: Buy now at $3 billion valuation, aiming for $4.5 billion+ by 2027.
- DOCN: Accumulate shares ahead of its potential valuation multiple expansion to 5x sales.

C3.ai's story is one of high risk and uncertain rewards. The future belongs to companies that can deliver growth and profits—and these two stocks are leading the charge.