C3.ai stock plunges 31% on steep revenue miss: here's how analysts read the selloff

C3.ai shares were set for heavy losses on Monday, falling by more than 31% after the artificial intelligence software maker warned that its latest quarterly results would fall far short of expectations.

The company’s preliminary figures for the July quarter revealed revenue of around $70.3 million — roughly 33% below its previous guidance.

The heavy selloff added to a 36% decline already this year through Friday’s close.

It marks a sharp reversal from the company’s brief status as an AI market darling in 2021.

CEO calls results "completely unacceptable"

GAAP loss from operations is expected at between $124.7 million and $124.9 million, with non-GAAP loss forecast at $57.7 million to $57.9 million.

As of July 31, the company held $711.9 million in cash, cash equivalents, and marketable securities.

Chief Executive Thomas Siebel called the sales results “completely unacceptable,” noting that the company has overhauled its sales and services organization.

The restructuring brings in new senior leaders, including Rob Schilling as Executive Vice President and Chief Commercial Officer, John Kitchingman as General Manager for EMEA, and Jeff Cosseboom as Group Vice President for North America East Sales.

Siebel, who disclosed earlier this year that he had been diagnosed with an autoimmune disease and is experiencing significant visual impairment, also confirmed last month that the company had begun a search for his successor.

Analysts downgrade ratings and lower targets

The results drew swift criticism from Wall Street. DA Davidson analyst Gil Luria downgraded the stock to Underperform from Neutral, calling the quarter “catastrophic” and warning that business trends were likely to worsen before they improve.

Luria also lowered his target price to $13 from $25, adding that a potential merger was unlikely until the company delivers stable financial results for several quarters.

Wolfe Research reiterated its Underperform rating and $15 price target, saying the absence of updated guidance in the company’s 8-K filing was a risk to expectations.

The firm said first-quarter results were a negative surprise likely to push the stock materially lower, and suggested that full-year fiscal 2026 revenue guidance could be revised significantly down or withdrawn entirely.

Data compiled by LSEG showed that the average rating from 16 analysts is “hold,” with a median price target of $27.50.

Facing intensifying competition in generative AI

In the rapidly evolving generative AI sector, C3.ai faces formidable rivals.

Palantir Technologies has cemented its presence in government and defense contracts with platforms such as Gotham and Foundry, now enhanced with generative AI capabilities.

Veritone, though smaller, has built niche offerings in media, legal, and energy markets through its aiWARE platform, also integrating generative AI.

Both companies are expanding into the regulated industries where C3.ai aims to grow.

Analysts say that to compete effectively, C3.ai must differentiate itself through turnkey, cross-industry applications that demonstrate consistent and scalable value to customers.