C3.ai: A Stock That’s Lost Its AI Mojo?

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Oh, C3.ai (AI). What happened to you? Once the darling of the enterprise artificial intelligence world, you’re now slouching through earnings reports like a hungover intern on their third cup of coffee. In Q1 of fiscal 2026, your revenue took a nosedive-$70.3 million, down nearly 20% year-over-year. Ouch. It’s like showing up to a potluck with store-bought cookies only to find out everyone else brought homemade quiches.

Now, the company says Q2 might be slightly better, projecting revenue between $72 million and $80 million. But let’s not break out the confetti just yet-the midpoint of that range still means another double-digit decline. And if you’re thinking, “Well, at least they have a plan,” think again. They’ve yanked their full-year guidance for fiscal 2026 faster than you can say “pivot strategy.”

What’s Really Going On Here?

Let’s talk about Thomas Siebel, the founder who recently stepped down as CEO due to health issues. He’ll stay on as Executive Chairman, which sounds like one of those HR euphemisms for “we need you to stick around but please stop touching things.” Enter Stephen Ehikian, the new guy in charge. He’s got AI creds, so maybe he’ll turn this Titanic around-or at least slow its descent into the iceberg.

Siebel himself admitted something fascinating: his heavy involvement in sales was apparently holding the whole operation together. Who knew CEOs were supposed to moonlight as closers? “With the benefit of hindsight,” he said in the earnings release, “it is apparent that my active participation in the sales process may have had a greater impact than I previously thought.” Translation: “Oops, I accidentally became the entire sales team.”

To make matters worse, the company restructured its sales and services org during Q1. Combine that with Siebel stepping back, and voilà-you get a recipe for chaos. Sure, they closed 40 deals, including 12 with the federal government, but it’s hard to celebrate when the ship feels like it’s taking on water.

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The Losses Are Piling Up Faster Than Bad Ideas in a Brainstorming Session

If the revenue drop wasn’t enough to give shareholders heartburn, the losses certainly will. C3.ai posted a staggering net loss of $116.8 million in Q1, nearly doubling last year’s red ink. Their gross margin plummeted to 38%, which is basically the financial equivalent of serving lukewarm soup at a Michelin-starred restaurant.

Here’s where it gets comical-or tragic, depending on how much skin you have in this game. The company spent almost as much on sales and marketing ($62 million) as it made in revenue. Research and development? Another $65 million. Free cash flow? Negative $34 million. It’s like watching someone try to build a rocket ship while setting fire to their wallet.

Valuation: Where Dreams Go to Die

Despite all this carnage, C3.ai isn’t drowning in debt-it has plenty of cash and marketable securities to keep the lights on. But here’s the kicker: the stock is valued at roughly $2.2 billion. Yes, billion. Even after tanking more than 90% from its all-time high, it trades at about 5.6 times last year’s sales. And remember, those sales are likely to shrink further as the company stumbles through its sales overhaul.

So what do we have here? A stock priced for perfection in a business that’s anything but perfect. Investors used to overlook the losses because revenue was growing. But now? Not so much. With AI fever sweeping Wall Street, there will undoubtedly be winners. Unfortunately for C3.ai, right now it looks less like Tony Stark and more like a guy in a tin foil hat yelling about robots taking over.

Investors betting on a turnaround are banking on Ehikian pulling off some miracle worthy of a TED Talk. But until then, tread carefully. This stock isn’t just risky-it’s the kind of risk that makes you wonder if you left the stove on before leaving the house. 🚨

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2025-09-05 14:34