Why C3.ai Stock Is Gaining Today

C3.ai (NYSE: AI) is gaining ground in Thursday's trading. The company's share price was up 4.7% as of 3:30 p.m. ET. Meanwhile, the S&P 500 index was flat in the daily session, and the Nasdaq Composite index was up 0.1%.

C3.ai stock is posting gains today in conjunction with bullish momentum for speculative artificial intelligence (AI) stocks. The company's share price could also be getting a lift from news that Palantir is aiming to form a consortium to challenge traditional players in the defense industry.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

C3.ai stock climbs higher on bullish AI momentum

At its policy meeting last week, the Federal Reserve announced another 25 basis-point cut for interest rates -- a move that was largely in line with the market's expectations. But Fed Chair Jerome Powell also indicated that the central banking authority now expects to serve up only two rate cuts on that level next year -- down from its previous forecast suggesting four rate cuts of 25 basis points next year.

While many growth-dependent and speculative AI stocks initially saw big sell-offs on the macroeconomic news, stocks in this category are now seeing some significant recovery. Investors have quickly become more tolerant of risk in the AI space, and C3.ai stock is climbing in conjunction with the trend.

Will C3.ai benefit from Palantir's AI consortium?

Late last week, the Financial Times reported that Palantir was teaming up with Anduril to form a consortium of companies aimed at disrupting the defense industry. With AI emerging as a key front in defense initiatives, the potential partnership could have dramatic implications.

While C3.ai was not named by the Financial Times as a company that has been approached to join Palantir and Anduril's defense-industry alliance, some investors appear to be betting that the company will be a beneficiary of the proposed consortium. C3.ai has already won U.S. defense contracts and has recently signed a partnership with Microsoft, and its established relationships could help make it an attractive candidate for new contracts in the public and private sectors.

Should you invest $1,000 in C3.ai right now?

Before you buy stock in C3.ai, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and C3.ai wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $859,342!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 23, 2024

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Palantir Technologies. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.