Northland Securities analyst Michael Latimore downgraded C3.ai (AI) stock to a “Hold” rating from “Buy” after the company’s preliminary Q1FY26 results missed its own guidance. Latimore also slashed the price target on AI stock to $17 from $35, implying that shares are almost fully valued at current levels. C3.ai is a cloud-based Enterprise artificial intelligence (AI) software company, with a subscription-based business model.
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Latimore ranks #1,373 out of the 9,948 analysts tracked on TipRanks. He has a 44% success rate and an average return per rating of 7.60%.
AI stock tumbled nearly 30% on August 11 following the news but reversed course yesterday, gaining 2.7%. Wall Street reacted with a series of downgrades and price target cuts following C3.ai’s revenue miss and wider loss expectations. Oppenheimer’s top analyst, Timothy Horan, also downgraded AI stock to Hold from Buy yesterday, without assigning a price target.
Here’s Why Latimore Downgraded AI Stock
Latimore is disappointed by C3.ai’s declining revenues, mainly the shortfall in subscription revenues. He highlighted that subscription revenue offers better visibility on quarterly performance, and a decline serves as a warning. He noted that the preliminary results reflect C3.ai’s underperformance compared to peers “at a time of strong enterprise AI demand.”
The company’s revised sales guidance of $70.3 million was about 33% below the midpoint of its prior guidance of $100 million to $109 million and down 19% year-over-year. Moreover, the adjusted operating loss was expected to be roughly twice as large as the company’s earlier forecast range of $23.5 million to $33.5 million. Additionally, C3.ai announced a restructuring of its sales and services organization, bringing in new leaders across regions.
C3.ai generates revenue mainly through enterprise subscription plans for its AI software services. Additionally, it earns revenue from professional services such as consulting, implementation, training, and prioritized engineering support. CEO Thomas Siebel described the Q1 sales performance as “completely unacceptable,” attributing challenges partially to the ongoing leadership transition and his health issues.
What Is the Price Target for C3.ai Stock?
Following the recent downgrades, AI stock has a Hold consensus rating on TipRanks. This is based on three Buys, eight Holds, and five Sell ratings. The average C3.ai price target of $23.71 implies 40.2% upside potential from current levels. Year-to-date, AI stock has lost nearly 51%.
