Core Insights - C3.ai, Inc. is transitioning to a new phase of commercial execution, focusing on Initial Production Deployments (IPDs) as the main driver for sales reset [1] - The company is emphasizing smaller, high-impact deployments that demonstrate measurable economic value before scaling [1][5] - Management is tightening execution standards around IPDs to improve conversion outcomes and align deployments with economic objectives [3][10] IPD Activity and Strategy - In fiscal Q2 2026, C3.ai signed 20 new IPDs, including six generative AI IPDs, bringing the total to 394, with 269 currently active [2][9] - IPDs serve as a proving ground for customers to validate outcomes and build confidence for broader rollouts, as seen with major accounts like GSK, Dow, and Holcim [2] - The company is absorbing near-term margin pressure to enhance IPD execution and long-term conversions [9] Financial Implications - The shift to an IPD-led approach has led to moderated gross margins due to higher upfront costs and a heavier services component [4] - Management views this margin impact as a trade-off for prioritizing conversion quality and long-term customer value over immediate margin expansion [4] Competitive Landscape - C3.ai's IPD-centric approach contrasts with competitors like Palantir, which emphasizes rapid production deployments, and Snowflake, which focuses on consumption-based expansion [6][7][8] - C3.ai's strategy is positioned between these two, focusing on smaller deployments with explicit objectives to improve conversion quality and reduce execution risk [9][10] Stock Performance and Valuation - C3.ai shares have declined 21.5% over the past three months, compared to a 3.1% decline in the industry [11] - The company trades at a forward price-to-sales ratio of 6.03, significantly below the industry average of 16.47 [14] - The Zacks Consensus Estimate for fiscal 2026 earnings per share implies a year-over-year decline of 195.1%, although estimates have increased in the past 60 days [15]

Core Insights - C3.ai is facing significant uncertainty as it enters the new year, with its stock having dropped 55% this year despite the overall AI boom benefiting many tech giants [1] - The unexpected retirement of founder and CEO Thomas Siebel has negatively impacted the company's revenue, leading to a sharp decline following his departure [2][9] - New CEO Stephen Ehikian brings experience that could help stabilize the company, but analysts remain cautious about the stock's potential recovery [3][13] Company Performance - C3.ai's revenue for the first half of fiscal 2026 was $145.4 million, a 20% decrease from the previous year, which was unexpected by management [9] - The company reported a GAAP loss of $221.4 million, a 72% increase compared to the same period last year, indicating challenges in cost management [10] - On an adjusted (non-GAAP) basis, C3.ai lost $84.5 million, marking a 474% increase from the prior year [11] Business Model and Applications - C3.ai offers over 130 ready-made AI applications that facilitate cost-effective AI adoption for businesses, which is crucial given the high costs associated with developing AI models from scratch [5] - Applications like C3.ai Reliability and C3.ai Smart Lending demonstrate significant efficiency improvements, such as reducing downtime by up to 50% and speeding up loan approvals by up to 30% [6][7] Market Outlook - Analysts are generally pessimistic about C3.ai's stock performance in 2026, with only two out of 16 analysts recommending a buy, while the majority suggest holding or selling [14] - The average price target for C3.ai stock is $14.67, indicating a potential decline of 8% from its current price [15] - The company is expected to face a revenue decline of up to 26% for the overall fiscal year 2026, reflecting ongoing challenges [12]

Core Insights - C3.ai's shares have faced significant challenges, dropping 55.52% in 2025, with a notable decline of 28.2% in August due to management warnings about missing guidance [1][4] - The company has recently shown signs of recovery, with quarterly results indicating a slight bounce in stock price, suggesting potential resilience [1][7] Company Overview - Founded in 2009 and based in Redwood City, California, C3.ai specializes in enterprise AI software, offering over 130 applications across various sectors including manufacturing, finance, and defense [2] - The company aims to enhance operational efficiency and innovation through practical AI solutions [2] Recent Developments - C3.ai has secured FedRAMP authorization, allowing it to handle sensitive federal workloads, which could open doors to government contracts [3][15] - This certification enhances the company's credibility in a security-focused sector and positions it for growth in federal markets [16][17] Financial Performance - In Q2 of fiscal 2026, C3.ai reported a revenue of $75.15 million, a 20.3% decline year-over-year, while adjusted loss per share was -$0.25, wider than the previous year's loss [8][12] - Subscription revenue fell to $70.2 million, and professional services revenue dropped 62.8%, impacting overall margins [8][9] Market Conditions - The recent 43-day government shutdown affected workflows and sales timelines, contributing to the company's revenue decline [9] - Despite these challenges, federal bookings surged 89% annually, indicating strong demand in the government sector [10] Future Outlook - Management projects Q3 revenues between $72 million and $80 million, reflecting a 19% to 27% drop from the previous year, with expected adjusted operating losses widening [12][13] - For fiscal 2026, anticipated revenues are between $289.5 million and $309.5 million, marking a 20% to 26% decline from fiscal 2025 [13] Analyst Sentiment - Analysts maintain a cautious stance on C3.ai, with a consensus rating of "Hold" and a mean price target of $16.67, suggesting a potential upside of 8.6% [18] - The stock is currently priced at 6.1x price-to-sales trailing, which is higher than some peers but below its historical median [19]

Core Insights - C3.ai has been selected by the U.S. Army's Rapid Capabilities and Critical Technologies Office to develop an "AI contested logistics" solution for combat operations, indicating strong demand for AI-driven logistics in military applications [1][2]. Group 1: Contract Details - The contract involves creating a system to manage and forecast logistics needs for Army units in high-risk environments, focusing on predicting requirements for spare parts, fuel, and munitions [2]. - The software will integrate with brigade-level Command & Control networks to ensure supply and resupply efforts can maintain operational tempo during chaotic conditions [2]. Group 2: Company Background and Capabilities - C3.ai is an enterprise-AI software company based in Redwood City, California, known for its C3 Agentic AI Platform and applications across various industries, including defense and healthcare [5]. - The contested logistics project utilizes existing products like "C3 AI Contested Logistics" and "C3 AI Readiness," which have been previously deployed for other U.S. defense clients [3]. Group 3: Strategic Implications - This contract reflects a broader strategic shift in military logistics, emphasizing the importance of real-time, data-driven solutions powered by AI [4]. - If successful, the system could provide a significant advantage in managing supply chains during periods of disruption [4].

Market Performance - Year-to-date, the Dow is up 14.5%, the S&P is up 17.3%, and the Nasdaq is up 22.2% [1] - Historically, Q4 is the best quarter for stocks, with December in post-election years having a 77.8% likelihood of finishing higher [1] Economic Indicators - Recent inflation reports show core inflation at 3.0% year-over-year, down from 3.3% [12] - The Producer Price Index (PPI) eased to 2.6% year-over-year, down from 2.8% [12] - The Personal Consumption Expenditures (PCE) index came in at 2.8%, down from 2.9% [13] - The Federal Reserve cut interest rates by 25 basis points, marking the third cut of the year, with expectations for another cut next year [13] Earnings Outlook - Q4 earnings growth is forecasted at 6.8%, with Q1 2026 at 8.2% and Q2 2026 at 9.8% [15] - Despite concerns over tariffs and recession, aggregate earnings estimates remain strong, indicating growth potential [16] Small-Cap Performance - The small-cap Russell 2000 reached new all-time highs following the Fed's rate cut [17] - Small-caps are expected to benefit significantly from lower interest rates and tax provisions allowing for immediate expensing of capital expenditures [18][19] Technology Sector - The current tech boom is driven by Artificial Intelligence (AI), which is expected to be transformative across various industries [6][9] - AMD's CEO predicts a 35% annual growth for the company over the next 3-5 years due to insatiable demand for AI [9] - NVIDIA's CEO describes AI as the most powerful technology force of our time, indicating a new computing era [10] Investment Strategies - Stocks with a Zacks Rank 1 Strong Buy have historically outperformed the market, achieving an average annual return of over 24% [21] - Strategies focusing on new highs and small-cap growth have shown significant returns, with small-cap growth averaging 44.3% over the past 25 years [26][28]

Core Insights - C3.ai, Inc. (AI) has experienced a significant decline in market value, losing over 35% in six months, compared to an 8.2% decrease in the industry [1][2] Group 1: Financial Performance - The company has faced slowing revenue momentum, weaker margins, and persistent losses, overshadowing optimism around enterprise AI adoption [2] - C3.ai reported a free cash flow of nearly negative $47 million, despite management reducing expenses by over $10 million sequentially [7] - The Zacks Consensus Estimate for fiscal 2026 loss per share has narrowed recently, indicating a slight improvement in expectations [14] Group 2: Sales and Execution Challenges - Deterioration in sales execution has been a major issue, with management acknowledging a significant weakening in deal velocity, leading to reduced revenues and margin compression [5] - An unexpected 43-day U.S. government shutdown disrupted key end-markets, particularly affecting procurement in defense, healthcare, and civilian agencies [6] Group 3: Market Opportunities and Trends - Despite challenges, bookings surged 49% sequentially in the second quarter of fiscal 2026, with federal demand representing 45% of total bookings [10][8] - The strengthening partner ecosystem is notable, with 89% of bookings coming through partners like Microsoft and AWS, indicating robust collaboration [11] - Product innovation, such as the launch of C3 AI Agentic Process Automation, is expected to unlock new revenue streams [12] Group 4: Strategic Initiatives - The new CEO has implemented a detailed operational plan focused on tighter sales rigor and improved qualification of Initial Production Deployments (IPDs) [13] - C3.ai maintains a strong cash position of $675 million, providing a runway for executing a turnaround without immediate liquidity risks [13] Group 5: Valuation - C3.ai is currently priced at a discount relative to its industry, with a forward 12-month price-to-sales ratio of 6.8, significantly lower than competitors like Palantir Technologies and SoundHound AI [17]

Core Insights - C3.ai, Inc. has been selected by the U.S. Army's RCCTO to enhance AI-powered logistics, improving forecasting for critical resources and operational efficiency [1][9] - The collaboration highlights the increasing importance of enterprise-scale AI in defense operations, aiming to provide data-driven support to units in high-risk environments [2] Group 1: Government Engagement and Market Growth - C3.ai has expanded its presence in U.S. government and defense sectors, with total bookings in Federal, Defense, and Aerospace increasing by 89% year over year, representing 45% of total bookings [4] - The federal market is a significant growth driver as agencies transition to commercial AI solutions, with the Department of Health and Human Services selecting C3.ai for a unified AI data foundation [5][6] Group 2: Stock Performance and Market Challenges - C3.ai's stock gained 3.7% during trading hours yesterday, but has seen a 0.6% decline over the past three months, underperforming the Zacks Computers - IT Services industry [3][7] - The company's performance has been affected by the government shutdown, weakening sales trends, and high initial production costs, yet its partnerships and growing federal bookings provide a solid foundation for long-term growth [8]

Core Viewpoint - C3.ai, Inc. is recognized as a promising AI stock with a "Market Outperform" rating and a price target of $24.00, driven by its long-term capital appreciation potential [1]. Group 1: Company Performance and Prospects - C3.ai has a diverse portfolio of industry-specific AI and GenAI applications, focusing on predictive maintenance and supply chain solutions [2]. - The company has established a strong partnership with Microsoft, resulting in "100 customer agreements across 17 industries" and 24 joint agreements in the fiscal second quarter [2]. - Despite facing challenges such as a significant business decline in the first fiscal quarter and a leadership transition to CEO Stephen Ehikian, the firm remains optimistic about C3.ai's future [3]. Group 2: Financial Metrics and Market Position - C3.ai achieved an 89% year-over-year increase in federal bookings during the second fiscal quarter, even amidst a government shutdown [4]. - The company is considered a potential acquisition target, exploring a possible sale while maintaining a favorable financial position with more cash than debt and a good current ratio [4]. - C3.ai is involved in building and operating enterprise-scale AI applications, contributing to digital transformation [5].

Revenue Composition - Subscription revenue accounted for 93% of total revenue for the three months ended October 31, 2025, compared to 86% for the same period in 2024[118]. - Professional services revenue represented 7% of total revenue for the three months ended October 31, 2025, compared to 14% for the same period in 2024[121]. - Approximately 5% of total revenue for the three months ended October 31, 2025, was derived from international customers, compared to 13% in the same period of 2024[166]. Financial Performance - Total revenue for the three months ended October 31, 2025, was $75,147,000, a decrease of $19,191,000 or 20% compared to $94,338,000 in the same period of 2024[185]. - Subscription revenue accounted for 93% of total revenue for the three months ended October 31, 2025, down from 86% in 2024, with a decrease of $10,920,000 or 13% year-over-year[188]. - Professional services revenue decreased by $8,271,000 or 63% for the three months ended October 31, 2025, primarily due to a decrease in prioritized engineering services[190]. - Gross profit for the three months ended October 31, 2025, was $30,380,000, a decline of $27,460,000 or 47% from $57,840,000 in the same period of 2024[194]. - Net loss for the three months ended October 31, 2025, was $104,668,000, compared to a net loss of $65,972,000 in the same period of 2024[185]. Cost and Expenses - Total cost of revenue for the three months ended October 31, 2025, was $44,767,000, an increase of $8,269,000 or 23% compared to $36,498,000 in 2024[192]. - Operating expenses for the three months ended October 31, 2025, totaled $142,493,000, an increase of $9,365,000 or 7% compared to $133,128,000 in 2024[185]. - Operating expenses for the six months ended October 31, 2025, increased by 14% to $293.8 million compared to $257.9 million in the same period last year[197]. - Sales and marketing expenses rose by 12% to $120.9 million for the six months ended October 31, 2025, primarily due to higher payroll costs of $22.7 million[198]. - Research and development expenses increased by 13% to $123.0 million for the six months ended October 31, 2025, mainly due to higher payroll and contractor costs of $14.5 million[199]. Cash Flow and Investments - Free cash flow for the six months ended October 31, 2025, was $(81.2) million, compared to $(32.4) million in the same period last year[206]. - Cash used in operating activities increased by $49.4 million to $(80.0) million for the six months ended October 31, 2025, primarily due to increased payroll and vendor costs[210]. - Net cash provided by investing activities was $10.9 million for the six months ended October 31, 2025, attributed to maturities and sales of marketable securities[211]. - Net cash provided by financing activities was $8.0 million during the six months ended October 31, 2025, due to proceeds from employee stock purchase and stock options[213]. Strategic Initiatives - The company aims to expand into industries such as telecommunications, smart cities, transportation, and healthcare, where it currently has limited presence[140]. - C3 AI launched 28 domain-specific generative AI offerings in early fiscal year 2024, addressing unique industry needs[146]. - C3 AI introduced the C3 AI Agentic Process Automation in September 2025, enhancing automation with minimal human intervention[148]. - The C3 Generative AI Accelerator Program was launched to help organizations implement generative AI solutions effectively, culminating in working prototype applications[150]. - A new global alliance with Microsoft was established in September 2024 to accelerate the adoption of Enterprise AI across all industries[164]. Market and Economic Conditions - The company does not believe inflation has materially affected its business or financial condition[223]. - Significant inflationary pressures could lead to higher employee compensation costs, which may not be fully offset by price increases[223]. - A hypothetical 10% change in foreign currency exchange rates may have a material impact on the company's unaudited condensed financial statements[222]. - The company's consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates[222]. - The company may face adverse effects in the future due to changes in foreign exchange rates impacting revenue and cash deposits[222]. Management and Organizational Changes - The restructuring of the sales and services organization has had a disruptive effect on financial performance[143]. - The appointment of a new CEO is expected to impact the execution of the company's business strategy[144]. - The average total subscription contract value is decreasing as the company expands its market-partner ecosystem[141]. - The company expects to continue incurring operating losses and may require additional capital to execute strategic initiatives for growth[207]. - Research and development expenses as a percentage of total revenue are expected to decline over the long term as the company benefits from economies of scale[179].

nadla / iStock via Getty Images Quick Read C3.ai (AI) stock has dropped 59% over the past year to a $2B market cap. The company is down 92% from its peak. C3.ai revenue fell 20% year-over-year to $75.1M. The company burned through $86M in cash over the last four quarters. C3.ai withdrew full-year guidance after CEO Thomas Siebel resigned due to health issues. If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire e ...