Where Will C3.ai Stock Be in 5 Years?

C3.ai (AI) has been a controversial stock in the tech sector, with its shares losing 72% of their value since its IPO in 2020. However, the company's recent performance and strategic shifts have raised questions about its potential in the coming years. This article explores the factors that could influence C3.ai's stock price over the next five years and why income-focused investors might want to consider alternative investments.

C3.ai operates in the fast-growing market for enterprise artificial intelligence (AI) software. The demand for AI software platforms is expected to grow at an annual rate of almost 41% over the next five years, reaching $153 billion in 2028. This market potential suggests that C3.ai could experience a turnaround in its fortunes, given its early-stage growth and the switch to a consumption-based business model.

The company's transition to a consumption-based model has shown promising results. In the first quarter of fiscal 2025, C3.ai reported a 21% year-over-year increase in revenue, an improvement over the 16% growth in fiscal 2024. This shift has lowered entry barriers for customers, leading to a significant increase in pilot projects and deals. The company's revenue is expected to increase by 23% year-over-year in fiscal 2025, indicating a positive trajectory for the next five years.


However, income-focused investors might want to consider the risks and uncertainties associated with AI ventures like C3.ai. While the company's potential is undeniable, its lack of profitability and the volatile nature of the tech sector make it a less attractive option for investors seeking stable, inflation-protected income.

Instead, investors might want to consider sectors that generate stable profits and cash flows, such as utilities, renewable energy, and the REIT sector. These sectors offer consistent, inflation-protected income and are well-suited for retirement portfolios. For example, the Cohen & Steers Quality Income Realty Fund (RQI) provides stable yields and potential for capital gains, making it an attractive option for income-focused investors.


Another option for investors seeking reliable income is the XAI Octagon Floating Rate & Alternative Income Trust (XFLT). This fund invests in floating-rate loans and other alternative income-generating assets, providing investors with a stable and growing income stream. Additionally, REITs like AWP and GOOD offer high dividend yields and the potential for capital appreciation, making them attractive options for income-focused investors.

In conclusion, while C3.ai's potential in the AI software market is undeniable, income-focused investors might want to consider alternative investments in sectors that generate stable profits and cash flows. By focusing on income-generating investments, investors can secure steady returns and protect their portfolios from the volatility of the tech sector. As always, it is essential to conduct thorough research and consult with a financial advisor before making any investment decisions.