Shares of C3.ai (AI) are up 3% following news that the U.S. Department of Health and Human Services has selected the company to build a data foundation spanning the National Institutes of Health (NIH) and the Centers for Medicare & Medicaid Services (CMS). C3.ai will integrate disease-specific NIH data enclaves with Medicare, Medicaid, claims, and state registry datasets.
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Moreover, the company reported a healthy beat for the fiscal second quarter after the markets closed on December 3. C3.ai posted an adjusted loss of $0.25 per share, narrower than the consensus estimate of $0.33 per share, but wider than the prior year period’s loss of $0.06 per share. Sales fell 20.4% year-over-year to $75.1 million, easily beating the consensus of $74.9 million.
The enterprise AI application software company faces ongoing leadership challenges in a fiercely competitive market and has no clear route to profitability.
C3.AI Provides Upbeat Guidance
The company provided upbeat guidance for the third quarter and full year fiscal 2026. For Q3, the company guided for revenue between $72 million and $80 million, ahead of the consensus of $75.6 million (at the midpoint). Similarly, full year revenue is projected between $289.5 million and $309.5 million, also above the consensus of $298.7 million.
Nevertheless, investors appear daunted by C3.ai’s continued bottom-line losses, dragging down its shares in after-hours trading yesterday. For FY26, C3.ai guided for operating losses in the range of $180.5 million to $210.5 million.
Analyst Reactions to C3.ai’s Results
Following the Q2 results, Citizens JMP analyst Patrick Walravens reiterated his Buy rating and $24 price target, which implies nearly 60% upside potential from current levels. He noted that C3.ai offers a broad suite of industry-specific AI and Gen AI applications, with notable strengths in predictive maintenance and supply-chain management. The company has built solid partnerships, including with Microsoft (MSFT), and now counts 100 customer agreements across 17 industries, with 24 joint agreements closed in Q2 FY26.
Walravens is also encouraged by C3.ai’s 89% year-over-year increase in federal bookings in Q2 despite the shutdown, signaling a robust federal pipeline in a large TAM. It could be a lucrative acquisition target, with early-stage discussions under way. New CEO Stephen Ehikian’s AI-scaling and government procurement experience, including a former Deputy Administrator role at the GSA, are viewed as key growth catalysts.
Conversely, Morgan Stanley analyst Sanjit Singh reiterated his Sell rating and $11 price target, implying 28.5% downside potential. Canaccord Genuity analyst Kingsley Crane reiterated his Hold rating and $16 price target, implying nearly 4% upside potential.
Is C3.ai Stock a Buy, Hold, or Sell?
On TipRanks, C3.ai stock has a Hold consensus rating based on one Buy, four Holds, and three Sell ratings. The average C3.ai price target of $14.86 implies 2.2% downside potential from current levels. Year-to-date, AI stock has lost nearly 56%.
