Wolfe Research Lowers C3.ai Price Target to $6
Wolfe Research analyst Gal Munda lowered the price target on C3.ai (NYSE: AI) to $6.00 (from $8.00) while maintaining an Underperform rating.
“Key Thoughts.
AI 3Q26 results were underwhelming, reflecting a 30% miss to revenue targets, impacted by weak sales execution and (based on the CFO’s comments on the earnings call) no non-recurring subscription revenue in the quarter (we assume this refers to demonstration licenses).
As previously flagged in prior notes, we believed a growth recovery for C3.ai was unlikely without new large partnerships and that growth remained at risk if demonstration license revenue could not continue at its prior cadence.
No revenue contribution from demonstration licenses in 3Q26 (vs. $22M in 2Q26) likely accounted for the $23M miss to guidance.
As a reminder, demonstration licenses are recognized upfront and have been described by C3.ai as licenses sold either to partners as sales enablement kits or to existing customers to increase adoption within their organizations.
Excluding demonstration licenses, subscription revenue was $48.2M (-0.4% Q/Q, -15.6% Y/Y), with C3.ai adding 44 new agreements, and 14 new IPDs (lowest number since introducing pilots in 2Q23), leading to active IPDs of 258 (vs.
269 in 2Q26), matching the record churn seen of 25 IPDs in 1Q26.
Most importantly, management announced a 26% headcount reduction, openly acknowledged that its cost structure was too high, and introduced a restructuring plan ($135M in non-GAAP NTM Opex cuts, ~$60M related to headcount) to improve profitability and decrease cash burn.
Under the refocused plan, C3.ai will also focus more on bookings and RPO growth, which we view positively following the volatile results seen under the pilot/IPD sales motion. Our Take.
While results were underwhelming and core subscription revenue remains muted, we view C3.ai’s new plan positively, as it offers a strategy to build a more efficient sales force focused on driving longer-duration recurring subscription deals.
We reiterate our UP and decrease our PT to $6 on 25% lowered revenue estimates and await C3.ai successfully executing its transition.”
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