C3.ai (AI) shares crashed more than 20% on Thursday morning after the enterprise software firm posted a disappointing Q4, offered equally poor guidance, and announced mass layoffs. And while these job cuts signal new CEO Stephen Ehikian’s commitment to “turning the business around,” there are significant headwinds that warrant keeping on the sidelines in this NYSE-listed firm, Citizens’ senior analyst Patrick Walravens told clients in a research note today.
Following the post-earnings slump, C3.ai stock is down more than 40% versus its year-to-date high.
Why Citizens’ Recommends Caution in Playing C3 Stock
Walravens agreed that eliminating 26% of its global workforce will benefit C3.ai in terms of operating efficiency but cited a perfect storm of internal instability for downgrading the AI stock to “Market Perform.”
The enterprise software company is grappling with material “near-term new business challenges,” evidenced in an alarming 46% year-on-year decline in revenue to about $53 million in the fourth quarter.
Additionally, execution risk tied to its high-stakes business turnaround and the “loss of day-to-day involvement of founder and visionary Thomas M. Siebel” could make it increasingly difficult for C3 shares to recover in 2026, Walravens added.
Note that C3.ai now sits decisively below all of its major moving averages (MAs), reinforcing that bears have firmly taken control across multiple timeframes.
Shifting Market Dynamics Could Hurt C3.ai Shares Further
Beyond internal turmoil, Citizens cautions against buying the post-earnings dip also because the broader landscape is becoming increasingly hostile for C3 stock.
Walravens highlighted a fundamental “market shift toward horizontal GenAI platforms,” where enterprises are choosing broad, integrated ecosystems over C3.ai’s niche-oriented applications. This trend is fueling intense competition from software behemoths.
Microsoft (MSFT) and Salesforce (CRM) are embedding AI natively into existing workflows, while data titans like Snowflake (SNOW) and Databricks are capturing the foundational layers of the artificial intelligence stack.
Against these well-capitalized horizontal platforms, C3.ai's proprietary solutions risk being marginalized as the industry consolidates around the biggest players, Walravens concluded.
What’s the Consensus Rating on C3.ai?
Heading into the Q4 earnings print, Wall Street had a consensus “Hold” rating on AI shares, with a mean target of about $14.
However, it’s reasonable to assume that analysts will downwardly revise their estimates following C3.ai’s disappointing fourth-quarter release.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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