Palantir Technologies (PLTR -2.52%) and C3.ai (AI -7.03%) can't seem to distance themselves from one another. Both companies develop enterprise software platforms that are rooted in artificial intelligence (AI). Moreover, public sector agencies are widely touted as users of their generative AI infrastructure offerings.
I've long been a champion of Palantir as an investment, but I've remained skeptical of C3.ai, which I see largely as a speculative opportunity. And after listening to C3.ai's latest earnings call, there was one word in particular that stuck out so much that I'm now even more suspicious of long-term potential.
What did C3.ai just say?
During the call for C3.ai's fiscal 2025 first quarter, which ended July 31, Chief Technology Officer Ed Abbo said:
The C3 AI platform was purpose-built and hardened over 15 years to rapidly deliver robust customer AI applications. Now let me take a moment to unpack what we mean by prebuilt applications, as this is a key differentiator for C3 AI. As a customer, if you buy a prebuilt application, you don't need to define what the application does, design and develop the ontology, the business logic, the AI or GenAI model pipelines, or the user interface. We've done all that.
The word that stuck out to me is "ontology." In the software lexicon, an ontology is essentially a way of visually mapping large sets of data to more easily process information.
Image Source: Getty Images
Why does this matter so much?
Given Abbo's commentary, you might think C3.ai has been a developer of sophisticated ontologies for well over a decade. But I went back and searched for the term "ontology" or "ontologies" in the company's past 10 earnings calls. It appeared a grand total of zero times.
By contrast, its rival Palantir -- which has been around for about 20 years -- hasn't stopped speaking about its ontologies since it went public in late 2020. In fact, Palantir has an entire page on its corporate website dedicated to ontologies.
My spidey sense goes off whenever I think a company is trying to seize on an emerging trend by using buzzwords. C3.ai is no exception.
The bottom line
The charts below illustrate two sharply contrasting narratives. The top one shows that Palantir has generated north of $2 billion in revenue during the past 12 months. More importantly, the company has transitioned from a business burning cash to one that is consistently profitable.
PLTR Revenue (TTM) data by YCharts.
On the other hand, as the bottom chart reflects, C3.ai has generated only about 13% of the sales that Palantir has, and its operating losses have widened.
And while big tech dominates the AI market, Palantir has seen cloud computing leaders Microsoft and Oracle join forces with it as opposed to competing with it. These opportunities represent an entirely new phase of growth for Palantir -- ones that could ignite further acceleration across both the private and public sectors.
It appears 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 against taking C3.ai's comments too seriously at the moment. At the end of the day, I think C3.ai's progress speaks for itself.
Although it is indeed growing, it pales in comparison to other mid-size 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 whatever they can to stay relevant -- beyond having its ticker symbol as "AI", of course. I see management's use of the term "ontology" as somewhat desperate, and really just an overzealous tactic to be seen and heard as the AI revolution continues.
