C3.ai (AI): Exploring the Company’s Valuation Following Recent Share Price Pressure

C3.ai (AI) shares have faced some pressure lately, with the stock down 24% over the past month and nearly 50% lower in the past year. Many investors are now revisiting their expectations as the company navigates current market dynamics.

See our latest analysis for C3.ai.

C3.ai's share price return has sharply trailed tech peers, with momentum fading as cautious investor sentiment weighs on growth stocks across the sector. Over the past year, its 1-year total shareholder return sits at -49.4%, despite a 3-year total return of 9.6% that hints at earlier optimism.

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With shares trading well below last year’s highs and modest analyst price targets, the real question is whether C3.ai is truly undervalued at these levels or if the market already reflects its future prospects.

Most Popular Narrative: 8.4% Undervalued

C3.ai’s latest fair value, according to the most widely followed narrative, now stands at $14.67. With shares last closing at $13.44, this puts the current price slightly below the projected target. This reflects investor uncertainty even as analysts see some potential for upside from this point.

Strategic integration with hyperscalers (90% partner-led deals, particularly with Azure, AWS, GCP) and systems integrators offers C3.ai an enlarged salesforce, broader go-to-market reach, and access to new customer bases. This expansion could scale bookings and top-line revenue as joint-selling programs are ramped globally.

Read the complete narrative.

Want to see what’s fueling this call for a higher share price? The narrative centers on a dramatic shift in customer reach, revenue transformation, and ambitious financial targets that might surprise you. Curious how all these pieces add up? Look inside for the big leaps that drive the latest valuation.

Result: Fair Value of $14.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing revenue declines and leadership transitions could pose significant challenges. These factors cast doubt on C3.ai’s ability to deliver on growth expectations.

Find out about the key risks to this C3.ai narrative.

Another View: Market-Based Valuation

Stepping back from fair value targets, C3.ai’s price-to-sales ratio is around 5x, which is notably higher than both the peer average of 2.1x and the US Software industry average of 4.6x. The fair ratio is just 2.4x. This gap means the stock is priced well above where the market might settle if sentiment shifts. Will investors continue to pay up, or will prices adjust downward?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own C3.ai Narrative

If you think there’s more to C3.ai’s story or would like to dig into the numbers on your own, you can quickly build your own perspective in just a few minutes by using Do it your way.

A great starting point for your C3.ai research is our analysis highlighting 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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