Palantir Technologies(NASDAQ:PLTR) The shares were in red-hot form in 2024 as investors showed increasing interest in this software platform specialist thanks to strong demand for the company’s artificial intelligence (AI)-focused offerings, leading to nice accelerations in revenue and revenue growth.
At the time of writing, the stock is up a whopping 380% this year and is now trading at an extremely rich valuation. With a price-to-sales ratio of 75 and an earnings multiple of 412, Palantir is not an ideal candidate for investors looking for artificial intelligence (AI) stocks at a reasonable valuation.
Of course, the forward earnings multiple of 217 indicates that the company’s bottom line is expected to improve markedly in the coming year, but that rich valuation also means that any sign of weakness in Palantir’s growth story could send the stock into a tailspin. There’s a good chance Palantir can maintain its impressive long-term growth given the lucrative AI software platform market it serves, but it’s still a risky investment.
Those looking for a more reasonably priced company trying to take advantage of this opportunity may want to consider this C3.ai(NYSE:AI). The stock posted a modest gain of 23% in 2024 and has been in the news for all the wrong reasons lately. But it also trades at significantly lower valuations than Palantir and uses a similar addressable market. Therefore, now would be a good time to ask whether C3.ai can follow in the footsteps of its larger peer and deliver eye-popping profits to investors.
According to market research firm IDC, the market for AI software platforms will generate $28 billion in revenue by 2023. The company predicts that this market could be worth as much as $153 billion by 2028, meaning there’s room for more than one company to flourish. this space. Both Palantir and C3.ai are just the beginning of a huge opportunity so far.
Palantir’s revenue over the past four quarters was $2.65 billion. C3.ai, on the other hand, generated $325 million. More importantly, both companies have seen an increase in their growth rates since the beginning of 2023.
PLTR Earnings Data (TTM) according to YCharts.
Furthermore, both companies reported nearly identical growth rates in their latest quarters. While Palantir’s revenue rose 30% year over year to $726 million in the third quarter of 2024, C3.ai’s revenue rose 29% year over year to $94 million in the second quarter of 2025 ended on October 31.
Both also raised their full-year revenue guidance as demand for their generative AI software solutions increased from both commercial and government customers. It’s worth noting that Palantir initially made a name for itself by providing software platforms and analytics solutions to US government agencies, but has lately focused on winning more commercial customers in the enterprise AI software space.
A similar story is happening at C3.ai. The company has signed new and expanded agreements with the U.S. Department of Defense, U.S. Air Force, U.S. Navy, U.S. Army, U.S. Marine Corps, Defense Logistics Agency, and the Chief Digital Artificial Intelligence Office, among others. CEO Tom Siebel said during the latest earnings conference call.
Meanwhile, C3.ai has partnered with major cloud service providers such as Microsoft, Amazonand Google to ensure broader reach for the more than 100 business AI applications it offers. The company also offers an enterprise AI application development platform that allows customers to build their own solutions, as well as industry-specific solutions that help customers integrate generative AI into their operations.
In short, the company appears to be positioning itself to make the most of the vast opportunities in the AI ​​software market. But will that be enough to succeed to the extent that Palantir has?
C3.ai is currently a much smaller company than Palantir. However, its revenue growth was almost the same as Palantir’s in the last quarter, and both companies have seen an uptick in their growth in recent years.
Moreover, both companies expect to report a 25% increase in their turnover in the current financial year. Palantir’s revenue is expected to reach $2.79 billion in 2024, while Palantir is expected to generate $388 million in revenue in the current fiscal year. Analysts also expect robust double-digit percentage growth in the coming years.
PLTR revenue estimates for next fiscal year data according to YCharts.
Better yet, analysts have raised their growth expectations for both companies. That’s not surprising given the size of the markets they serve, and chances are their growth prospects will continue to improve as adoption of generative AI software increases.
So while C3.ai is expected to remain a smaller company than Palantir for years to come, its solid growth and end-market capabilities make it an ideal alternative for anyone looking to capitalize on the growth of the AI ​​software market. a reasonable valuation.
After all, C3.ai’s sales multiple of 13 is less than a fifth of its larger counterpart, even though their growth rates are nearly identical. That’s why investors looking for the next Palantir would do well to keep C3.ai on their watchlist or buy it now, as its improving growth profile could lead to healthy stock price gains.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, Microsoft, and Palantir Technologies. The Motley Fool recommends C3.ai and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
Could C3.ai Become the Next Palantir Technologies? was originally published by The Motley Fool
