C3.ai stock downgraded by Oppenheimer after weak preliminary results

Investing.com - C3.ai (NYSE:AI) was downgraded by Oppenheimer from Outperform to Perform, with the firm removing its previous $45 price target following disappointing preliminary first-quarter results. The stock has fallen sharply, with InvestingPro data showing a 27% decline in the past week alone, while maintaining a high beta of 1.97, indicating significant volatility.

The enterprise AI software provider significantly reduced its revenue expectations for the first quarter of fiscal 2026, lowering guidance from approximately $105 million to around $70 million. This represents a 35% sequential decline, raising concerns about the recurring nature of the company’s subscription revenues.

C3.ai also increased its projected non-GAAP operating loss from $29 million to $58 million, further highlighting the company’s financial challenges. The preliminary results prompted Oppenheimer to dramatically reduce its estimates for the company.

CEO and founder Tom Siebel will be stepping down from his position due to health issues, adding leadership uncertainty during this challenging period for the company.

Oppenheimer expressed concern that these results may indicate secular weakness in underlying trends for C3.ai, noting that the company has become "very difficult to forecast" and suggesting the services may not be working as advertised.

In other recent news, C3.ai reported preliminary first-quarter fiscal 2026 revenue of approximately $70.3 million, marking a 19% decline from the previous year and falling significantly short of the company’s guidance of $104.5 million. This revenue miss has led to a series of analyst actions. Northland downgraded C3.ai’s stock rating from Outperform to Market Perform, citing concerns over missed subscription revenue, which is typically a more predictable stream. UBS lowered its price target for C3.ai from $27 to $23 while maintaining a Neutral rating, highlighting the substantial revenue shortfall.

Similarly, Wedbush reduced its price target from $35 to $23, although it retained an Outperform rating, describing the recent quarter as challenging for the company. Needham continued to hold a Hold rating on the stock, pointing out the 33% miss at the midpoint of the company’s revenue guidance. In a strategic move, C3.ai announced the launch of its Strategic Integrator Program, allowing partners to license its Enterprise AI platform to develop and market their own AI applications. This program aims to provide partners with intellectual property rights, access to C3.ai’s developer community, and collaborative resources.

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