How C3.ai maintains its ‘leadership’ in the AI sector: CEO

Shares of C3.ai (AI) are surging on Thursday after the company shared its fourth quarter results, reporting 20% year-over-year revenue growth and fiscal year 2025 revenue guidance that beat expectations. The company’s results are the latest sign of strong demand in the AI sector.

C3.ai Chairman and CEO Tom Siebel joins Morning Brief to discuss the demand for AI software and the balancing act with energy needs.

“This is the biggest market we’ve seen in the history of enterprise applications software. The game we’re playing at C3.ai is to see if we can establish and maintain a market leadership position globally. And that’s that’s what we’re doing. We’re investing in growth. We’re investing in technology. We’re investing in sales. We’re investing in customer service. And this is manifesting itself in, well, top line subscription revenue growth last quarter is 41% year-over-year,” Siebel tells Yahoo Finance.

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This post was written by Nicholas Jacobino

Video Transcript

We’re seeing more evidence of strength in the A I trade C three A I, the latest company to add to the frenzy here.

The company’s full year guidance for 2025 beating expectations the fourth quarter revenue up 20% from the year prior bolstered by subscription revenue.

Now all of this is pushing the stock higher this morning as we’re tracking shares up 12% here with more on the results.

We’ve got the man behind the curtain himself.

C three A I chairman and CEO Tom Siebel always, I mean office goals ignited every single time here, Tom.

Uh We gotta talk about this quarter.

What are you seeing right now in demand for A I products and specifically for C three A I as compared to the rest of the industry as this has been one of the broader thematic trades for the better part of a year now.

Um The, well, we’re seeing the demand for A I infrastructure, the demand for A I applications, but it’s just staggering.

I mean, look at what’s going on with the NVIDIA.

Uh these chips, the reason that people, people are purchasing these chips is to run enterprise A I applications and this is what we do.

So I think there is some pressure on the software market.

I think in many ways A I might be a headwind for the software market, but for what we do, it is definitely a tailwind.

The demand for generative A IA I applications and defense intelligence, manufacturing, uh financial services is, is just huge tom talk to us a little bit more about where you’re seeing that demand growth and the ability then to increase your market share as just one of the larger players within the space.

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And then ultimately, what that is going to do to help drive some of that subscription growth, which is very important here to see three A I.

Well, I mean, this is a market share game.

We’re in the, we’re in the earliest innings of what will be what’s expected to be greater than a trillion dollar addressable software market.

By the time we a generative A I, it might be a couple of trillion.

So this is the biggest market we’ve seen in the history of enterprise application software.

The game we’re playing at C three A I is to see if we can establish and maintain a market leadership position globally.

And uh that’s, that’s what we’re doing.

We’re investing in growth, we’re investing in technology, we’re investing in sales, we’re investing in customer service and this is manifesting itself and well, top line subscription revenue growth last quarter.

Is 41% year over year.

A pretty good result, Tom, maybe this is reading too much into things, but specifically on the operational side of the business, when you think about the amount of additional space within data centers that companies like yours would need to make sure that they’re taking up to keep up with demand.

That’s I would perceive a, a rising cost.

How do you kind of expense manage through some of the increased demand?

Uh You know, we’re finding that, you know, the hyper scalar are keeping up with the demand of our customers.

So I don’t think there’s a shortage in silicon.

I don’t think there’s a shortage in infrastructure.

Well, we might actually run into a shortage in power.

Uh Believe it or not, I think it’s, you know, that’s, that’s the critical issue uh as this market grows in the next decade is right now, there is not enough power uh available to power these data centers.

So we need to think about that.

And Tom before we let you go, just when you’re talking about some of the demand exactly where that’s coming from.

Uh federal side of things that really stuck out to me here, 50% of bookings coming from Federal defense and aerospace.

So something you asked about a couple of times here on the call, what is that ability here for growth or opportunity specifically within federal?

What does that look like for C three A I, well, it’s, it’s staggering and, you know, when we get into, you know, defense intelligence community, we are at war with China uh in applying A I to, you know, hypersonics, contested logistics predicted maintenance readiness, whatever it, whatever it may be.

And so we have the privilege of being able to serve in the air force and in the marines and in the intelligence community.

And we’re, you know, we’re, we’re, we’re pleased to do so.

That’s a, that market grew.

I think revenue greater than 100% year over year.

And uh we think those investments continue.

Now when you get to the, the, the the the civilians sector of federal, let’s look at health and human services, social Security veterans administration.

And there’s a massive opportunity there for generative A I for enabling these people to improve the services and benefits programs to the American public.

So, you know, the, the the defense budget might be order of 800 billion.

You get into health and human services, social security, what have you, you now, you know, greater than $2 trillion annual budget.

So this is uh they’re making huge investments in these technologies going forward and uh we hope to be able to um uh participate in them providing better services to the American public.

Tom, it’s always great to talk to you.

Thanks so so much for your insight here.

Making the time for us this morning.

C three A I shares up nearly 12% here in early action.

Tom Zel.

Thanks so much.

Thank you.