C3.ai: Competitive Pressures, Weak Growth-Profit Profile Drive Sell Rating and $10 Price Target

In a report released today, Koji Ikeda from Bank of America Securities reiterated a Sell rating on C3ai, with a price target of $10.00.

Koji Ikeda has given his Sell rating due to a combination of factors tied to C3.ai’s competitive positioning and financial outlook. He questions whether the company can sustain a distinct edge in enterprise AI as the market becomes increasingly crowded with both large incumbents and aggressive startups, which could pressure pricing and customer retention. In his view, while C3.ai was an early mover in AI, that first-mover advantage is not sufficient on its own to guarantee long-term success in such a rapidly evolving space. Reflecting this uncertainty and the perceived weaker prospects versus peers, he cut his price objective to $10, valuing the stock at a lower revenue multiple than comparable infrastructure software companies.

Another central concern in Ikeda’s Sell rating is the company’s weak balance of growth and profitability. A meaningful share of C3.ai’s revenue still comes from pilot projects rather than recurring subscriptions, and he believes investors need clearer proof that these pilots are consistently converting into long-term contracts. Looking ahead, his forecasts call for modest top-line expansion combined with deeply negative free cash flow margins, resulting in an overall growth-plus-profit profile far below sector averages. Given the anticipated need for ongoing heavy investment, lingering execution issues, and a risk that competitive pressures intensify, he expects C3.ai’s shares to lag faster-growing and more profitable software peers for the foreseeable future.

Based on the recent corporate insider activity of 70 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AI in relation to earlier this year.