C3.ai reported a difficult third quarter of fiscal 2026, with management acknowledging results as clearly inadequate and well below objectives after the company failed to close planned business in North America and Europe. Shares have declined 40.1% over the past three months, underperforming peers across the industry.

Bookings in the federal, defense and aerospace segment rose 134% year-over-year, accounting for 55% of total bookings as management described the federal opportunity as increasingly large and important. This segment’s momentum contrasted sharply with challenges in commercial markets.

During the quarter, C3.ai secured multiple government engagements, including an enterprise AI deployment for USDA’s intergovernmental operations, a Department of Energy data unification and decision platform, and logistics planning solutions for NATO and allied defense organizations such as Japan’s Ministry of Defense and the UK Royal Navy.

Management indicated accelerating demand for secure commercial off-the-shelf AI platforms capable of supporting mission-critical operations, positioning the federal pipeline as a key growth catalyst against broader execution challenges. C3.ai trades at a forward price-to-sales ratio of 4.51, well below the industry average, reflecting both risk and opportunity.