A word from C3.ai’s earnings call that should make investors skeptical about the company’s future

Palantir Technologies (PLTR 2.02%) and C3. have (AI 1.22%) they don’t seem to distance themselves from each other. Both companies develop enterprise software platforms that are rooted in artificial intelligence (AI). Furthermore, public sector agencies are widely regarded as users of their generative AI infrastructure offerings.

I’ve long been a champion of Palantir as an investment, but remain skeptical of C3.ai, which I see as largely a speculative opportunity. And after listening to C3.ai’s most recent earnings call, there was one word in particular that stuck out so much that I’m now even more suspicious of its long-term potential.

What did C3.ai just say?

During C3.ai’s fiscal first quarter 2025 call, which ended July 31, Chief Technology Officer Ed Abbo said:

The C3 AI platform has been purpose-built and strengthened over 15 years to rapidly deliver robust AI applications to customers. Now, let me unpack what we mean by out-of-the-box apps, as this is a key differentiator for C3 AI. As a customer, if you buy a pre-built app, you don’t have to define what the app does, design and develop the ontology, business logic, AI or GenAI model pipelines, or user interface. We did all that.

The word that struck me is “ontology”. In software lexicon, an ontology is essentially a way to visually map large data sets to more easily process the information.

Image source: Getty Images

Why does it matter so much?

Given Abbo’s comment, you might think that C3.ai has been a developer of sophisticated ontologies for over a decade. But I went back and searched for the term “ontology” or “ontologies” in the company’s last 10 earnings calls. A grand total of zero times appeared.

In contrast, its rival Palantir — which has been around for about 20 years — hasn’t stopped talking about its ontologies since going public in late 2020. In fact, Palantir has an entire page on its corporate website dedicated to ontologies.

My spider sense goes off whenever I think a company is trying to cash in on an emerging trend using buzzwords. C3.ai is no exception.

The bottom line

The graphs below illustrate two starkly contrasting narratives. The top one shows that Palantir has generated more than $2 billion in revenue over the past 12 months. More importantly, the company has gone from a cash-burning business to one that is consistently profitable.

PLTR Revenue (TTM) data by YCharts.

On the other hand, as the chart below shows, C3.ai only generated about 13% of Palantir’s sales, and its operating losses have widened.

And while big tech dominates the AI ​​market, Palantir has seen leaders in cloud computing Microsoft and Oracle to join forces with it, as opposed to competing with it. These opportunities represent a whole new stage of growth for Palantir — ones that could spark further acceleration in both the private and public sectors.

It seems to me that big tech sees Palantir as a real player in the AI ​​world — and much of that perception can be traced to its impressive growth underpinned by a robust suite of ontology platforms.

I would caution investors not to take C3.ai’s comments too seriously at this time. At the end of the day, I think C3.ai’s progress speaks for itself.

While it is indeed growing, it pales in comparison to other mid-sized enterprise software developers. Moreover, as it continues to burn cash, it’s hard to see how C3.ai could catch up to the likes of Palantir.

I think C3.ai and its management team are doing everything they can to stay relevant — beyond having the “AI” symbol, of course. I see management’s use of the term “ontology” as somewhat desperate and really just an overzealous tactic that needs to be seen and heard as the AI ​​revolution unfolds.