Down 50%, Should You Buy the Dip on C3.ai?

Key Points

• C3.ai's impressive momentum has come to an abrupt halt thanks to its organizational restructuring.

• The AI software specialist may continue to remain under near-term pressure as new executives take charge.

• In the meantime, it may be a good idea to keep this stock on the watch list despite its sharp drop in 2025.

• 10 stocks we like better than C3.ai ›

This has turned out to be a terrible year for C3.ai (NYSE: AI) investors so far, as shares of the pure-play enterprise artificial intelligence (AI) software solutions provider have dropped 50% in 2025 as of this writing. The stock had been gaining momentum in recent months but was hammered earlier in August following the release of its preliminary results.

C3.ai stock lost over a quarter of its value in a single day after the company announced its preliminary fiscal 2026 first-quarter results (for the three months ended July 31) on Aug. 9. Let's see why investors pressed the panic button and find out if it is worth buying the stock following its big pullback.

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C3.ai's alarming fiscal Q1 performance

C3.ai provides an AI software platform that allows enterprise and federal customers to build and deploy custom AI applications and AI agents. The company has been able to expand its customer base at a nice pace in recent quarters, indicating that it was on the right track to capitalize on the huge addressable opportunity in enterprise AI software.

That's why C3.ai's preliminary results shocked investors. The company says its revenue last quarter stood at just over $70 million, well below the guidance range of $100 million to $109 million. The non-GAAP (adjusted) loss from operations was just below $58 million, which was more than double its original expectation.

C3.ai reported $87 million in revenue in the year-ago period and its non-GAAP operating loss stood at $16.6 million. So, the company is definitely not going in the right direction despite operating in a thriving market. But you may be wondering why C3.ai's growth trajectory -- which had been gaining momentum -- has collapsed all of a sudden.

AI Revenue (Quarterly) data by YCharts

C3.ai CEO Thomas Siebel points out that there are two reasons why this is the case. First, C3.ai's organizational restructuring by bringing in new leadership has had a "disruptive effect." Second, the CEO's health issues kept him from taking part in the sales process, and Siebel points out his absence "may have had a greater impact" than anticipated on the company's performance.

The company is now hunting for a new CEO. There is a good chance that this transition could weigh on its performance in the near term as it tries to navigate an organizational restructuring while the new leadership settles in. A number of new leaders have joined C3.ai of late and it may take some time for them to get used to the way the company works and deliver fruitful results.

What should investors do?

The near-term uncertainty makes C3.ai a risky bet right now. Of course, the company points out that it has "completely restructured the sales and services organization" and is trying to "return to accelerating growth and increased customer success," but it would be better if investors wait for tangible signs of a turnaround.

The good part is that C3.ai announced a new contract with Brazil's Eletrobras just recently, apart from launching new agentic AI solutions. These moves could help the company steady the ship in the future, but the reality right now is that analysts have significantly reduced their growth expectations.

AI Revenue Estimates for Current Fiscal Year data by YCharts

Moreover, the company's expanding losses are another cause for concern. As such, investors would do well to stay away from C3.ai right now, though it may make sense to keep this AI stock on the watch list. C3.ai is serving a fast-growing AI software market that's expected to grow at a compound annual rate of 25% through 2030, and any positive developments in its operations could bring the stock back into the good graces of investors.

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