Overview
BofA Securities has reduced its price target for C3.ai (NYSE: AI) to $10.00 from $14.00 and left its rating unchanged at Underperform. The bank highlighted mounting competition in the enterprise AI market and signaled doubts about the company’s ability to establish a durable competitive advantage. At the time of the update, the stock was trading at $12.26 and has declined 61.75% over the past year, according to InvestingPro data.
Competitive dynamics and analyst concerns
BofA analyst Brad Sills emphasized uncertainty over whether C3.ai can become a substantial share gainer within the AI category, which the firm described as "being attacked from all angles." Those competitive concerns are tied to a weak financial health assessment: InvestingPro assigns C3.ai a score of 1.57 out of 5 on financial health.
Financial profile and valuation
In its note, BofA highlighted the company’s revenue growth and free cash flow trajectory, observing that free cash flow and other key metrics could remain negative for several more years. The bank indicated that until revenue and cash flow trends improve and C3.ai can demonstrate a defensible long-term value proposition, its shares are likely to lag peers in infrastructure software.
InvestingPro data cited by the firm shows a negative EBITDA of $400.55 million, and analysts reflected in that dataset do not expect the company to be profitable this year. BofA’s revised $10 price target is built on a 2.7x EV/FY26E revenue multiple, down from its prior 3.3x multiple and positioned well below peers trading at 5.7x. That lower multiple incorporates BofA’s updated view of C3.ai’s growth prospects, risk profile, and a compression relative to comparator multiples.
InvestingPro’s Fair Value calculation, however, indicates that C3.ai may be slightly undervalued at current market levels, and analyst targets in that dataset span from $8 to $24.
Market context and recent performance
BofA’s adjustment comes as the enterprise AI sector faces increased competition and scrutiny around the sustainability of business models and timing for achieving profitability. The stock is trading close to its 52-week low of $12.05 and InvestingPro data records price volatility with a 49.38% decline over the past six months.
Recent company developments
C3.ai reported second-quarter fiscal 2026 results that matched consensus expectations and reintroduced guidance for fiscal 2026. Despite that, other analysts remain cautious: DA Davidson maintained an Underperform rating, pointing to the possibility of sizable revenue declines.
The company is exploring a potential merger with Automation Anywhere, which would combine C3.ai’s enterprise AI software with Automation Anywhere’s robotic process automation products. On the federal front, C3.ai has secured a contract with the U.S. Army to provide AI-driven logistics solutions aimed at improving forecasting for parts, fuel, and munitions. The U.S. Department of Health and Human Services selected C3.ai to build a unified data foundation to integrate information across the National Institutes of Health and the Centers for Medicare & Medicaid Services. Additionally, C3.ai received FedRAMP authorization, enabling federal agencies to deploy its technology for sensitive government applications. BofA noted these developments as part of the company’s ongoing efforts to expand federal government support and enterprise capabilities, while remaining cautious about broader commercial traction.
Where this matters
- Enterprise software and infrastructure vendors - valuation and competitive positioning.
- Federal technology procurement - adoption of enterprise AI within government operations.
- Defense and logistics - AI applications for forecasting and operational support.