Sell Rating on C3ai Due to Growth Concerns and Uncertain Long-term Benefits of Baker Hughes Contract

Analyst Sanjit Singh from Morgan Stanley maintained a Sell rating on C3ai (AI – Research Report) and increased the price target to $22.00 from $20.00.

Sanjit Singh has given his Sell rating due to a combination of factors impacting C3ai’s financial outlook. Despite the renewal of the Baker Hughes joint venture, which alleviated some immediate risks and contributed to a revenue beat, there are still concerns about the company’s growth quality and margins. The lack of detailed information regarding the structure and economic value of the Baker Hughes contract raises questions about its long-term benefits.
Sanjit Singh also noted the slowdown in subscription revenue growth, which decreased from 22% to 9% year-over-year, and the high proportion of revenue from demonstration licenses and services. These factors contribute to uncertainty about the sustainability of C3ai’s growth. Additionally, while the company’s valuation remains at 7 times its projected 2026 sales, Singh seeks more clarity on the contribution from Microsoft and greater confidence in the durability of C3ai’s growth trajectory.

In another report released today, Bank of America Securities also reiterated a Sell rating on the stock with a $24.00 price target.