C3.ai (AI): Is the AI Stock Finally at a Contrarian Buy Opportunity?

The stock price of C3.ai (NYSE: AI) has plummeted nearly 50% in 2025, driven by a 20% year-over-year revenue decline, widening operating losses, and the abrupt departure of CEO Thomas Siebel due to health reasons, according to a Nasdaq article. This collapse has sparked debates among investors: Is C3.ai's battered stock a contrarian opportunity, or is it a high-risk gamble amid mounting legal and operational challenges?

Leadership Transition and Strategic Reorientation

Stephen Ehikian, a seasoned executive with a track record of scaling AI ventures and government-sector experience, was appointed CEO in September 2025, as reported by a Yahoo Finance piece. His tenure marks a pivotal shift for C3.ai, which under Siebel's leadership grew into a market leader in enterprise AI but struggled to achieve profitability. Ehikian's background-founding companies like RelateIQ (acquired by Salesforce) and serving as Acting Administrator of the U.S. General Services Administration-positions him to pivot the company toward public-sector contracts, the Yahoo piece notes. A notable development is C3.ai's three-year partnership with SMX to deploy its AI technology in secure government settings, a move analysts view as critical for offsetting commercial headwinds, as the Yahoo piece explains.

Analyst Skepticism and Legal Risks

Despite Ehikian's credentials, investor sentiment remains cautious. UBS set a price target of $17.00 (a -2.91% downside from its September 2025 price), while MarketWatch's average target of $14.67 suggests a "Hold" rating, as noted in a Benzinga analyst ratings page. The stock's recent 25.58% single-day drop-triggered by Q1 FY 2026 results and revised guidance-has intensified scrutiny, the Marketscreener news reports. Compounding these issues, C3.ai faces a class-action lawsuit alleging misleading statements about its financial health and leadership stability, the Marketscreener news reports. The lawsuit, which names investors who purchased shares between February 26, 2025, and August 8, 2025, has a lead plaintiff deadline of October 21, 2025, as the Marketscreener news notes.

Financial Metrics and Valuation

C3.ai's financials underscore its precarious position. As of Q3 2025, the company reported $724.3 million in cash reserves but a GAAP net loss per share of $(0.62) and a non-GAAP loss of $(0.12), according to its Q3 2025 financial results. Its P/E ratio of -6.57 is below its 10-year average of -62.08, suggesting undervaluation or subdued growth expectations, as the SimplyWall.St valuation page notes. However, the Price-to-Sales ratio of 5.6x-higher than both its peer average (2.3x) and the U.S. software industry average (4.9x)-indicates a premium valuation despite unprofitability, the SimplyWall.St valuation page notes. Analysts project potential revenue growth to $613.6 million by 2028, but this hinges on Ehikian's ability to execute a turnaround, the Yahoo Finance piece notes.

Contrarian Logic vs. Execution Risks

For contrarian investors, C3.ai's discounted valuation and Ehikian's strategic focus on public-sector AI partnerships present a compelling case. The government sector, with its long-term contracts and stable demand, could provide a buffer against commercial volatility. However, the risks are substantial: The company's burn rate, legal liabilities, and history of unmet guidance raise questions about its ability to sustain momentum. As one analyst noted, "The success of this leadership transition will be a key near-term catalyst-but also a significant risk," as the Yahoo Finance piece notes.

Conclusion: A High-Stakes Gamble

C3.ai's stock collapse has created a scenario where the potential rewards for a successful turnaround are asymmetric to the risks. For investors with a high risk tolerance and a long-term horizon, the company's strategic repositioning under Ehikian and its cash reserves could justify a speculative bet. Yet, the legal uncertainties, weak financial performance, and execution risks make this a high-stakes gamble rather than a clear-cut contrarian buy. As the market watches for Q4 results and Ehikian's progress, patience-and a diversified portfolio-will be essential for those considering entry.