What Happened?
Shares of artificial intelligence (AI) software company C3.ai (NYSE: AI) fell 22.6% in the afternoon session after a combination of disappointing preliminary financial results and a major leadership change. The company announced preliminary revenue for its fiscal first quarter that fell well short of analyst expectations and its own previous guidance (roughly 33% below the midpoint of its prior outlook), with CEO Thomas Siebel calling the results "completely unacceptable." Further adding to the uncertainty, Siebel is stepping down from his role due to health reasons, and the company has begun a search for a successor. This dual blow of weak performance and an unexpected leadership transition has led to multiple analyst downgrades and price target cuts, fueling a strong negative sentiment among investors. The stock's decline is a continuation of a broader struggle for the company, which has faced challenges in its growth and profitability despite the overall excitement surrounding the AI sector.
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What Is The Market Telling Us
C3.ai’s shares are extremely volatile and have had 38 moves greater than 5% over the last year. But moves this big are rare even for C3.ai and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 18 days ago when the stock dropped 10% on the news that the company announced it had started a search for a successor to its founder and CEO, Thomas M. Siebel. The enterprise AI software company stated that the decision followed founder and CEO Thomas M. Siebel's diagnosis with an autoimmune disease in early 2025, which led to what was described as a 'significant visual impairment.' This news introduced uncertainty regarding the company's future leadership, which weighed on investor sentiment. Siebel planned to remain in his role until a successor was appointed, after which he was set to transition to the position of Executive Chairman, focusing on strategy and customer relationships.
C3.ai is down 50.6% since the beginning of the year, and at $17.13 per share, it is trading 60.1% below its 52-week high of $42.94 from December 2024. Investors who bought $1,000 worth of C3.ai’s shares at the IPO in December 2020 would now be looking at an investment worth $185.16.
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