Why C3.ai Stock Collapsed in 2025
C3.ai fell 61% in 2025 and now sits 92% below its peak. That drawdown wasn't random. It was driven by shrinking revenue, rising losses, and leadership uncertainty during one of the strongest AI investment cycles in years.
If you underwrite software risk for a living, here's the short version: weak execution in enterprise sales, deteriorating unit economics, and better operators taking share.
What changed in 2025
Despite broad AI spending, C3.ai's revenue declined 14% year over year to $71 million last quarter. Operating loss ballooned to $112 million. Heavy sales, marketing, and product spend didn't translate into new logos or expansions.
On top of that, founder and CEO Thomas Siebel retired in 2025 due to a medical condition. Leadership transitions in the middle of a strategic reset add real risk to pipeline stability and culture.
Competitive pressure is real
Enterprise buyers are consolidating budgets with vendors that show fast deployments, repeatability, and clear ROI. In this lane, Palantir is growing faster and expanding margins at a larger scale. That signals share shift in the very segment C3.ai targets.
For primary sources, review recent updates from C3.ai investor relations and Palantir investor relations.
Valuation reset didn't fix the core problem
C3.ai entered public markets with a price-to-sales near 90. After years of pressure and the 2025 drop, the multiple is around 5.3. Cheaper doesn't equal cheap if revenue is shrinking and losses are widening.
Shares outstanding are up 46% since the IPO. Dilution plus negative operating leverage is a tough base case for long-term returns unless growth, margins, and cash flow inflect.
What finance teams should monitor in 2026
- Bookings and remaining performance obligations: Is there real demand recovery, or just pipeline noise?
- Dollar-based net retention: Are existing customers expanding, or is churn masking new wins?
- Gross margin trend: Any signal that delivery is getting more standardized and less services-heavy?
- Sales efficiency (Magic Number, CAC payback): Is the go-to-market engine producing efficient growth?
- Operating expense discipline and SBC as a % of revenue: Can the company contain dilution and drive leverage?
- Free cash flow and runway: How dependent is the model on capital markets in 2026?
- Customer concentration and mix (commercial vs. public sector): Where is product-market fit actually showing up?
- Leadership stability and execution cadence: Clear priorities, consistent guidance, and delivery against it.
Bottom line
The sell-off in 2025 reflected fundamentals, not just sentiment. Unless C3.ai shows a sustained turn in bookings quality, net retention, and margin structure, the stock can stay under pressure into 2026.
If you're comparing vendors or mapping budget to outcomes, go straight to the metrics above and the primary disclosures. The story needs proof of repeatable deployments and improving unit economics before it works as an investment case.
Related resource
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