Options Traders Bet on C3.ai's Volatility Amid AI Sector Uncertainty

C3.ai Inc. (AI) shares fell 2.96% to $17.03 on Thursday, extending a three-day losing streak as the stock traded 62.22% below its 52-week high, according to a MarketWatch report. The decline came amid heightened options activity, with investors trading 102,395 contracts—equivalent to 10.2 million underlying shares—representing 137.1% of the company's average daily volume. A notable option was the $18 strike call expiring in November 2025, with 22,183 contracts traded, highlighting speculative interest in the stock's potential rebound.

The stock's underperformance contrasted with mixed movements in broader markets, as the S&P 500 dropped 0.99% and the Dow fell 0.23%. Analysts noted that C3.ai's struggles reflected broader tech sector pressures, with Microsoft and Alphabet posting declines and gains, respectively. Meanwhile, Oracle Corporation (ORCL) saw its shares fall 6.69% to $256.89, despite a mix of analyst ratings ranging from "Outperform" to "Buy".

Options traders are also eyeing C3.ai's price volatility. A put contract at the $17 strike price offers a 7.65% return if it expires worthless, while a covered call at the $18 strike could yield 11.79% if exercised, according to a Nasdaq options roundup. These strategies reflect investor bets on the stock's near-term direction amid uncertainty about its long-term trajectory.

The broader AI sector remains in focus as OpenAI, the research lab behind ChatGPT, prepares for a potential IPO within two years, according to Capital's IPO guide. While no official timeline has been set, Capital notes OpenAI's capped-profit structure and partnerships with Microsoft and Azure could influence its valuation. The company's recent launch of the "Operator" AI agent and its Stargate Project—a $500 billion AI infrastructure initiative—have drawn investor speculation, Capital adds. However, legal challenges, including a lawsuit over model training practices, and reliance on key partners like Microsoft pose risks to its growth narrative, Capital warns.

Market watchers also highlighted C3.ai's recent IBD Relative Strength rating of 71, a sign of improved momentum despite its recent pullback, according to MarketWatch data. The stock's performance is being tracked against rivals in the AI space, including Microsoft and Nvidia, which remain central to the sector's evolution.