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Can C3.ai Flip Resistance to Support Amid the Trump Tariff Pause? An AI Stock’s Tipping Point

Nathaniel StoneThursday, May 1, 2025 5:24 pm ET

30min read

The Trump administration’s 2025 tariff policies have created a perfect storm for global supply chains, pushing industries like automotive, tech, and manufacturing into turmoil. For C3.ai (NYSE:AI), an enterprise AI software provider, the fallout has been mixed. While its core clients in energy, defense, and government sectors remain resilient, broader macroeconomic headwinds and investor skepticism have weighed on its stock. Now, with a 90-day tariff pause announced, the question is: Can C3.ai pivot from resistance to support, or is its AI-driven narrative still too fragile?

The Tariff Pause: A Mixed Blessing for C3.ai’s Industries

The 2025 tariff pause primarily impacts industries such as automotive, where U.S. vehicle prices rose by $3,285 per unit due to part tariffs, and electronics, where PlayStation 5 prices could hit $1,200. However, the pause offers temporary relief for sectors like energy and defense—areas where C3.ai derives significant revenue.

C3.ai’s exposure to tariffs is nuanced:
- Energy (15% of bookings): Clients like QatarEnergy and LyondellBasell rely on C3’s energy management tools to cut costs and emissions. The tariff pause may stabilize their operations, indirectly boosting C3’s revenue.
- Government/Defense (24% of bookings): Contracts here are less tariff-sensitive, as geopolitical priorities often override trade policies.
- Manufacturing (15% of strategic partnerships via PwC): Predictive maintenance software, critical for automakers like Stellantis, could see renewed demand if the tariff pause eases supply chain bottlenecks.

However, the broader AI sector faces challenges. Microsoft’s cancellation of data center contracts and investor flight from overhyped AI stocks have dragged down C3.ai’s valuation.

C3.ai’s Stock: Why the Disconnect?

Despite Q3 FY2025 revenue growth of 26% to $98.8 million, C3.ai’s stock fell 22.89% year-to-date. Key concerns include:
1. CEO Share Sales: Thomas Siebel’s recent stock sales raised doubts about insider confidence.
2. Guidance Misses: Q4 revenue guidance ($103.6–$113.6M) fell short of analyst expectations, amplifying fears of slowing growth.
3. Sector-Wide Sentiment: The AI sector is in correction mode, with even NVIDIA trading below its 2023 highs despite robust earnings.

The Case for Buying C3.ai Now

Tariff-Resistant Clients: 48% of C3.ai’s revenue comes from energy and government/defense—sectors insulated from tariff-driven volatility.
PwC Partnership Momentum: Their joint push into manufacturing and utilities could unlock $2.3 billion in annual AI spending by 2027, per a Deloitte report.
Agentic AI Differentiation: C3’s autonomous decision-making platform, showcased at its 2025 Transform conference, offers a scalable edge over generic AI tools.

The Risks

Tariff Uncertainty: The 90-day pause could be extended, but retaliatory tariffs from China and the EU remain unresolved.
Competitor Pressure: Microsoft’s Azure AI and AWS’s SageMaker continue to encroach on C3’s enterprise space.
Valuation Concerns: The stock trades at 12x 2025 revenue estimates, a discount to its 2023 peak but still premium to its fundamentals.

Conclusion: A Buy for the Long Game?

C3.ai’s stock faces near-term headwinds, but its strategic positioning in energy, defense, and manufacturing—sectors critical to U.S. economic stability—gives it staying power. The tariff pause buys time for its clients to recover, potentially lifting C3’s bookings.

Crunching the numbers:
- Upside: Analysts’ consensus $35 price target implies a 32% rally from current levels, assuming revenue growth stabilizes at 20–25%.
- Downside: If guidance misses continue or tariffs reignite, the stock could test its 2024 lows near $20.

For investors with a 3–5 year horizon, C3.ai’s leadership in enterprise AI and its anchor clients make it a compelling speculative play. But in 2025, patience—not panic—is the watchword.

In a world where AI’s value is increasingly tied to tangible outcomes, C3.ai’s focus on operational efficiency for industrial giants may yet turn resistance into support—if the tariffs stay paused and the sector’s skepticism fades.

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