One tech company is betting the government and AI are only starting to intersect.
“It’s [enterprise AI] being used internally to automate such things as the acquisition process as well as for customer support,” C3.ai’s (AI) new CEO Stephen Ehikian said on Yahoo Finance’s Opening Bid. “The use cases, the demand, is across every single agency.”
That didn’t stop investors from punishing the stock after another disappointing quarter.
Shares tumbled 14% in extended trading Wednesday after C3.ai reported Q1 revenue had fallen 19.4% year over year to $70.3 million. Year to date, the stock is down 53%.
Founder and outgoing CEO Thomas Siebel admitted the slip was “just inexcusable,” blaming disruption from a recent sales reorganization and his reduced role due to health issues.
“The good news is we have new leadership, new CEO, great product, big market … and we’re ready to rock,” Siebel said.
Ehikian has scaled two startups acquired by Salesforce (CRM). But it’s his recent work as acting administrator of the General Services Administration to implement President Trump’s AI action plan that may give C3.ai a unique edge.
In a new note to clients, Wedbush analyst Dan Ives wrote that the addition of Ehikian could help C3.ai sharpen its sales execution and reenergize its pitch to governments and enterprises at a time when confidence is wavering.
The firm called Ehikian “a solid hire,” given his experience scaling AI startups, but warned that C3.ai faces “significant hurdles to overcome to regain the Street’s confidence” after repeated execution stumbles. Wedbush maintained an Outperform rating but trimmed its price target to $20 from $23.
Others on Wall Street remain cautious. DA Davidson analyst Lucky Schreiner kept an Underperform rating on the stock with a $13 price target, citing revenue declines and execution issues tied to C3.ai’s restructured sales force. Schreiner noted that subscription revenue fell nearly 30% year over year, reflecting weakness across the business and a scaled-back deal with longtime partner Baker Hughes.
“We have updated our estimates in line with 2Q26 guidance and now estimate (24%) Y/Y revenue declines for FY26,” the firm wrote, pointing to uncertainty around C3.ai’s ability to stabilize growth. The company also withdrew its full-year outlook, stoking fresh doubts about enterprise AI demand.
Ehikian, who officially took over as CEO on Sept. 1, wasted no time in pitching his vision. He said his government background gives C3.ai an advantage in expanding its federal footprint, where the company is already working with large agencies. His goal, he added, is to make the platform “easy to purchase, easy to be trusted at scale, and easy to be adopted by government and the commercial sector.”
