A class action lawsuit was filed against C3.ai (AI) by Levi & Korsinsky on August 22, 2025. The plaintiffs (shareholders) alleged that they bought C3.ai stock at artificially inflated prices between February 26, 2025, and August 8, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought C3.ai stock during that period can click here to learn about joining the lawsuit.
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C3.ai is one of the leading players in the enterprise artificial intelligence (AI) sector, providing software solutions across industries such as energy, manufacturing, finance, and healthcare, and serving a diverse mix of private and public clients.
C3.ai’s claims about its growth prospects and the impact of its founder and former CEO Thomas Siebel’s health issues on the company’s ability to close deals are at the heart of the current complaint.
C3.ai’s Misleading Claims
According to the lawsuit, C3.ai and two of its current and/or former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about the then-CEO’s ability to lead the company effectively in light of certain health concerns, and ancillary issues, from SEC filings and related material.
During the Class Period, the former CEO reiterated his ability to lead the company efficiently and manage the daily operations of the C3.ai’s business.
For instance, during an earnings call, he stated that he remained actively involved with sales teams and partners worldwide, noting his only limitation was reading emails. He emphasized that he was fully engaged and managing business details daily.
Additionally, during an earnings call on May 28, 2025, announcing the results of Q4 FY25, C3.ai’s CFO provided optimistic financial guidance. For Q1FY26, C3.ai projected revenue between $100 million and $109 million. For the full fiscal year, revenue was expected in the range of $447.5 million to $484.5 million. Adjusted operating loss for Q1 was forecasted between $23.5 million and $33.5 million, while for FY26, it was estimated between $65 million and $100 million.
Finally, in a press release dated July 24, 2025, C3’s then-CEO announced that after being diagnosed with an autoimmune disease earlier in the year, he had experienced significant visual impairment. He added that he would continue to serve as the CEO of C3.ai until the board appointed his successor. Following the news, AI stock plunged nearly 11%.
However, subsequent events (detailed below) revealed that the defendants failed to inform investors about the true impact of the former CEO’s health problems on C3.ai’s growth potential.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the company’s business and prospects during the Class Period. Importantly, the defendants failed to inform investors that C3.ai’s CEO health was having a significant impact on the company’s ability to close deals, that its management was unable in minimizing that impact, and that the company would not be able to execute upon its profit and growth potential as a result.
The information became clear on August 8, 2025, when C3.ai released disappointing preliminary financial results for the first quarter of fiscal 2026. In the same press release, the company also slashed its revenue guidance for Fiscal 2026.
C3.ai attributed its disappointing sales performance and reduced guidance to the leadership reorganization and the CEO’s health challenges. This development triggered an immediate response from analysts and investors, leading to a sharp decline in C3’s stock price. Following the news, AI stock collapsed 25.6% on the next day.
To conclude, the defendants failed to inform investors of the true impact the CEO’s health issues had on C3.ai’s performance. Due to these issues, AI stock has lost 44.4% so far this year.
