Shares of C3.ai (AI) jumped Thursday after the company reported fourth-quarter results, reporting 20% year-over-year revenue growth and revenue guidance for the financial year 2025 exceeded expectations. The company’s results are the latest sign of strong demand in the AI sector.
Tom Siebel, Chairman and CEO of C3.ai, joins Morning Brief to discuss demand for AI software and balancing energy needs.
“This is the largest market we have seen in the history of enterprise application software. The game we play at C3.ai is to see if we can establish and maintain a leading position in the global market. We’re investing in growth, in technology, in sales, and that’s showing up in subscription revenue growth last quarter. year after year,” Siebel told Yahoo Finance.
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This message was written by Nicolas Jacobino
Video transcription
We’re seeing more and more evidence of strength in the AI business, C three AI, the latest company to add to the frenzy here.
The company’s full-year guidance for 2025 beats expectations, with fourth-quarter revenue up 20% from a year earlier, supported by subscription revenue.
Now, all of this is pushing the stock higher this morning as we track shares up 12% here with more earnings news.
We have the man behind the curtain himself.
C three Chairman and CEO of AI, Tom Siebel, always, I mean, the office goals have been ignited every time here, Tom.
Um, we need to talk about this quarter.
What are you currently seeing in the demand for AI products and in particular for AI C three compared to the rest of the industry, as it is one of the broadest thematic professions for almost a year now.
Well, we’re seeing demand for AI infrastructure, demand for AI applications, but it’s just staggering.
I mean, look what’s happening with NVIDIA.
Um, these chips, the reason people buy these chips is to run enterprise AI applications and that’s what we do.
So I think there is some pressure in the software market.
I think in many ways AI could be a drag on the software market, but for what we do, it’s certainly a tailwind.
The demand for generative AI applications I and defense intelligence, manufacturing, uh financial services, is simply enormous. Tell us a little bit more about where you see that growth in demand and the ability to then grow your market share as simply as possible. one of the biggest players in the space.
And then ultimately what is this going to do to help drive some of the subscription growth, which is very important here to see three A I.
Well, I mean, it’s a market share game.
We are in the early stages of what is expected to be a larger than $1 trillion addressable software market.
By the time we become generative AI, that could be a few billion.
So this is the largest market we’ve ever seen in the history of enterprise application software.
The game we play at C three AI is to see if we can establish and maintain a leading position in the global market.
And uh, that’s what we do.
We’re investing in growth, we’re investing in technology, we’re investing in sales, we’re investing in customer service and that’s showing up in the growth in subscription revenue last quarter.
Is 41% year over year.
Pretty good result, Tom, maybe this is overstating things, but especially on the operational side of the business, when you think about the amount of extra data center space that companies like yours would need to ensure they’re picking up to meet demand.
This is what I would perceive as an increasing cost.
How are you managing your expenses in the face of increased demand?
Um, you know, we’re seeing that, you know, hyperscalars are meeting our customer demand.
So I don’t think there is a shortage of silicon.
I don’t think there is a shortage of infrastructure.
Well, we could indeed find ourselves facing an electricity shortage.
Um, believe it or not, I think that’s, you know, that’s the critical issue, as this market grows over the next decade, right now, there’s no enough energy available to power these data centers.
So we need to think about it.
And Tom, before we let you go, just as you’re talking about part of the demand, where exactly it’s coming from.
Um, the federal side of things that really stood out to me here, 50% of the bookings come from federal defense and aerospace.
So, something that you asked several times here on the call, what is this capacity here for growth or opportunity specifically within the federal government?
What does that look like for C3 AI, well, it’s staggering and, you know, when we get into the defense intelligence community, we’re at war with China uh to apply AI to, you know, hypersonics, contested logistics predicted maintenance readiness, whatever it was, whatever it was.
So we have the privilege of being able to serve in the Air Force, in the Marines, and in the intelligence community.
And we’re, you know, we’re, we’re, we’re happy to do it.
It is a market that has developed.
I think revenue is over 100% year over year.
And uh, we think those investments continue.
Now when we come to the civilian sector of the federal government, let’s look at Health and Human Services, the Social Security Veterans Administration.
And there is a huge opportunity there for generative AI to enable these individuals to improve services and benefit programs for the American public.
So, you know, the defense budget could be around 800 billion.
You get into Health and Human Services, Social Security, what do you have, you know now, an annual budget over $2 trillion.
So, they’re investing heavily in these technologies going forward and we hope to be able to participate in that by providing better services to the American public.
Tom, it’s always a pleasure talking to you.
Thank you very much for your insight here.
Take time for ourselves this morning.
C three AI shares here almost 12% in early action.
Tom Zel.
Thank you so much.
THANKS.