Why C3.ai Stock Is Sinking Today

Shares of C3.ai (NYSE: AI) are falling on Thursday. The company's stock had lost 6.4% as of 2:10 p.m. ET, but was down as much as 10.3% earlier in the day. The drop comes as the S&P 500 was flat and the Nasdaq Composite lost 0.6%.

C3.ai, which helps businesses leverage artificial intelligence (AI), reported its fiscal 2025 Q3 earnings Wednesday evening, and several key analysts downgraded their ratings.

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The numbers

The company posted a loss of $0.12 a share on $98.8 million in sales, versus the consensus estimate of a $0.24 loss on $98.01 in sales. The $98.8 million in sales represents a 26% increase over the same period in the previous year.

CEO Thomas Siebel was encouraged, saying C3.ai had "achieved significant milestones" and that it is "on the verge of building one of the world's great companies."

Investors were less rosy. Despite the mostly positive numbers, they were likely hoping to see year-over-year (YOY) sales growth that matched or exceeded the previous quarter's YOY growth of 28.3%.

Ratings downgrades

A number of analysts lowered their price targets for C3.ai, including KeyBanc Capital Markets which maintained its underweight rating and lowered its price target for c3.ai from $29.00 to $21.00.

Analysts cited concern in the makeup of C3.ai's revenue mix. The company saw its demonstration licenses surge, up 50% quarter over quarter. While some of these will translate into full subscriptions, this revenue is not recurring and brings uncertainty to C3.ai's growth picture.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.