• Microsoft has seen a gain in the value of its investment in artificial-intelligence software company C3.ai.
• Microsoft sunk money into C3 right as it was going public, following a strategy Salesforce has repeatedly employed.
• C3 formed a partnership with Microsoft in 2018 as the two companies agreed to sell C3's software running on Microsoft's Azure cloud.

Microsoft has already picked up a gain on its investment in artificial-intelligence software maker C3.ai as C3 debuts on the New York Stock Exchange.

The deal shows how serving as one of a handful of big providers of cloud infrastructure can open up financial opportunities.

On Wednesday C3 stock started trading at $100 per share. That's up 138% from $42, where shares were initially priced. C3 said in an updated prospectus on Nov. 30 that Microsoft would buy $50 million worth of C3's shares, meaning that Microsoft picked up 1.19 million shares. The stock ended its first day of trading at $92.49 per share, up 120%.

With C3, business users can build custom applications that run AI models without writing code, or they can use pre-made tools that are tailored for the needs of different industries, such as helping banks spend less time on loan applications or helping manufacturing companies with predictive maintenance.

Microsoft rival Salesforce has made it a practice to buy shares in relevant tech companies that are on the verge of going public. It's made these deals, known as concurrent private investments, with companies like Dropbox, Zoom, and most recently with Snowflake. Microsoft is now employing that strategy, placing a bet on a company it began working more closely with in 2018.

C3 and Microsoft said it would jointly market and sell C3's AI software running on Microsoft's Azure cloud. In October the two companies went further, saying they would collaborate with Adobe to sell smart customer-tracking software to businesses in a variety of industries.

Despite its Microsoft relationship, C3 advertises in its prospectus that organizations can use its software on Amazon, Google or IBM's clouds or run the software in their own existing data centers.

C3 underlined the point that its software was cloud-agnostic in its IPO filing, writing that it "will run on any cloud platform without modification, eliminating any additional effort and cost of refactoring the application if moving it to a different cloud vendor."

C3 CEO Tom Siebel, who sold his customer-tracking software company Siebel Systems to Oracle for $6.1 billion in 2006, founded C3 in 2009. C3 said it had a $14.9 million net loss on $41.3 million in revenue in the quarter that ended on Oct. 31, with revenue increasing 6% year over year. More than 20% of its revenue comes from energy companies Baker Hughes and Engie.

Microsoft agreed to hold on to the C3 shares for at least 365 days. Microsoft declined to comment on the investment.

In 2017 Microsoft invested $45 million in health-care company Adaptive Technologies, long before Adaptive's 2019 Nasdaq debut. Adaptive has leaned heavily on Azure. In addition to receiving cloud revenue from Adaptive, Microsoft also won a slice of a company whose shares are five times more valuable now than what Microsoft initially paid. Adaptive did not respond to a request for comment on whether Microsoft remains an Adaptive investor.

At the end of October Microsoft had $301 billion in assets on its balance sheet, more than 96% of companies in the S&P 500 index. Around 1% of those assets, or $3.1 billion, come in the form of equity investments. The value of Microsoft's equity holdings grew about 5% from the previous quarter, slightly underperforming the S&P over the same period.

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