Why C3.ai (AI) Is a Strategic Buy Despite Leadership Turmoil

The AI sector, while brimming with transformative potential, remains a volatile arena where hype often overshadows fundamentals. Yet, for value investors, the current landscape offers opportunities to identify undervalued players with resilient business models. C3.ai (AI), despite recent leadership upheaval, stands out as a compelling case. With a diversified revenue base, a robust partner ecosystem, and a forward price-to-sales (P/S) ratio significantly lower than peers, C3.ai's fundamentals suggest a path to recovery-and a stark contrast to the vulnerabilities of rivals like BigBear.ai.

Diversification as a Hedge Against Sector Volatility

C3.ai's strategic pivot away from oil and gas-a sector prone to cyclical swings-has been a cornerstone of its resilience. According to a Nasdaq report, non-oil and gas revenue surged 48% year-over-year in fiscal 2025, with the company now serving 19 industries, including manufacturing, life sciences, and state and local government. This diversification has mitigated sector-specific risks, as evidenced by the 26% year-over-year revenue growth in Q3 2025, reaching $98.8 million, according to its Q3 2025 results.

In contrast, BigBear.ai's reliance on government contracts exposes it to procurement delays and shifting policy priorities. While specific government revenue percentages for BigBear.ai remain undisclosed, its Q2 2025 results revealed an 18% revenue decline to $32.5 million and a net loss of $228.6 million. This highlights the fragility of a business model dependent on a single client base.

A Partner-Driven Ecosystem: C3.ai's Competitive Edge

C3.ai's partnerships with hyperscalers like Microsoft, AWS, and Google Cloud have amplified its market reach. In fiscal Q4 2025, 73% of deals were partner-driven, as the Nasdaq report noted, and by Q3 2025, the company had closed 66 agreements, including 50 pilots, with Microsoft Azure leading the charge by securing 28 industry-specific deals, as detailed in its Q3 release. These alliances not only expand C3.ai's distribution network but also validate its enterprise AI solutions in critical sectors like defense and healthcare.

BigBear.ai, meanwhile, lacks a comparable partner ecosystem. Its recent struggles to convert a $380 million backlog into consistent revenue underscore the limitations of a siloed approach (as reported in its Q2 2025 results). Without strategic alliances, BigBear.ai's ability to scale remains constrained, further widening the gap with C3.ai.

Undervaluation and Financial Resilience: A Value Investor's Sweet Spot

C3.ai's forward P/S ratio of 7.98 is notably lower than peers like Palantir (12.5) and Veritone (15.2), suggesting it is undervalued relative to its revenue growth trajectory, as the Nasdaq report observes. This discount is even more compelling when considering the company's financial resilience: it maintains $750 million in cash and generated positive free cash flow despite a net loss of 16 cents per share in fiscal 2025, per the same Nasdaq analysis.

Leadership Turmoil: A Short-Term Headwind, Not a Death Knell

C3.ai's recent leadership changes have raised eyebrows, but the company's operational and financial foundations remain intact. The launch of the C3 AI Strategic Integrator Program (SIP) in Q1 2026-a partnership initiative enabling joint commercialization of Enterprise AI applications-demonstrates continuity in its growth strategy, according to its Q1 2026 results. With 40 agreements closed through its partner network in Q1 and a 54% year-over-year increase in qualified opportunities, the company is executing its roadmap despite leadership transitions.

BigBear.ai, by comparison, faces a more existential challenge. Its revised revenue guidance of $125–$140 million for fiscal 2025-a sharp drop from earlier projections-signals a loss of investor confidence (as outlined in its public filings). Without a clear path to profitability, its government-dependent model appears unsustainable.

Conclusion: A Strategic Buy in a Fragmented Market

C3.ai's diversified revenue streams, partner-driven growth, and undervalued valuation position it as a strategic buy for investors seeking resilience in the AI sector. While leadership changes introduce short-term uncertainty, the company's financial strength and expanding ecosystem provide a solid foundation for recovery. In contrast, BigBear.ai's reliance on government contracts and recent operating losses highlight the risks of a narrow value proposition.

For value investors, C3.ai represents a rare combination of discounted fundamentals and long-term potential-a bet on a company building a durable enterprise AI platform, rather than chasing fleeting trends.