C3.ai (AI) stock is down about 30% in today’s pre-market trading session, after the company released its preliminary Q1 results that fell far below expectations. The AI software maker now expects revenue between $70.2 million and $70.4 million, about 33% below the midpoint of its prior guidance of $100 million to $109 million and down 19% year-over-year.
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Meanwhile, the adjusted operating loss is expected to be between $57.7 million and $59.9 million, roughly twice as large as the company’s earlier forecast of $23.5 million to $33.5 million. This bigger-than-expected loss spooked investors, pushing the stock down nearly 14% to $19.09 late Friday, its lowest level since April.
Notably, the company is expected to release its full financial Q1 FY26 results on September 3.
CEO Health and Sales Reorganization Affect Results
C3.ai CEO Tom Siebel called the Q1 sales figures “completely unacceptable.” He said the weak results were due to a major reorganization of the global sales and service teams, which is now complete. Siebel said his health problems, including an autoimmune disease causing severe vision loss, limited his role during the quarter.
On July 25, C3.ai said Siebel would step down as CEO for health reasons, and the search for a new leader has begun. However, he will remain as executive chairman of the company. Siebel said he expects sales to improve in the second quarter.
The sharp fall in C3.ai’s stock shows that investors are worried about the leadership changes and the company’s ability to execute its plans.
Analyst Downgrades AI Stock
After C3.ai reported preliminary Q1 results, DA Davidson cut its rating on the stock to Underperform from Neutral and lowered its price target to $13 from $25. The firm said C3.ai was reorganizing its sales and services teams and bringing in new leaders in several regions.
However, it expressed concerns over the durability of C3.ai’s growth given its increasing reliance on non-recurring revenue. DA Davidson said the weak preliminary results appeared to reflect this trend and warned that the business was likely to get worse before it improved.
Is C3.ai Stock a Good Buy?
Currently, Wall Street is sidelined on C3.ai stock, with a Hold consensus rating based on five Buys, seven Holds, and three Sell recommendations. The average AI stock price target of $31 indicates about 40% upside potential from current levels.
