From AI Darling to Sell-Off Target: BigBear.ai Slumps 30%, C3.ai Falls 26% After Earnings Disaster

TradingKey - At the beginning of the year, Wall Street widely predicted that 2025 would mark the shift from “hardware-driven” to “software-driven” AI momentum — heralding it as the “year of AI software.” However, the latest earnings season has revealed a different story: while a select few AI application stocks like Palantir have shown strong growth, high-profile names such as C3.ai and BigBear.ai are facing a “darkest hour,” with their shares plunging around 30% post-earnings.

On Monday, August 11, enterprise AI software provider C3.ai tumbled 25.58%, reaching its lowest level since early 2023. The sell-off followed the company’s release of preliminary Q1 2026 fiscal results after the market closed on Friday, which D.A. Davidson analysts labeled a “disastrous” performance.

C3.ai projected Q1 revenue of $70.2 million to $70.4 million, down from $87.2 million in the same quarter last year and far below the $104.3 million consensus estimate.

C3.ai CEO Thomas Siebel admitted that the quarter’s sales performance was “completely unacceptable,” attributing the decline to disruptions from organizational restructuring and his ongoing health issues.

Siebel said his health challenges prevented him from participating in the sales process as actively as before, and he now realizes his involvement had a greater impact than he initially thought. He added that C3.ai has completed the restructuring of its sales and service teams and is in the process of selecting a new CEO.

Investment bank Wedbush warned that if C3.ai fails to turn around this “brutal quarter,” “dark days may lie ahead.”

Following closely behind C3.ai, BigBear.ai, which saw its stock double in just over a month earlier this year, also delivered a disastrous earnings report. The AI analytics company provides AI- and machine learning-powered decision intelligence solutions primarily to the U.S. Department of Defense, intelligence agencies, and government clients.

BigBear.ai reported second-quarter revenue down 18% YoY to $32.5 million, below the $40.6 million consensus and the prior quarter’s $34.7 million. The company posted a loss of $0.71 per share, significantly wider than the expected loss of $0.06 and the previous quarter’s loss of $0.25.

BigBear.ai cut its full-year guidance, now expecting 2025 revenue of $125 million to $140 million, down from the previous range of $160 million to $180 million.

The company attributed the weakness to cost-cutting initiatives by the U.S. Department of Government Efficiency, particularly affecting its business with the U.S. Army, which is seeking to consolidate and modernize its data architecture.

While it’s difficult to say whether the disappointing results from these two AI software companies reflect broader industry trends, the fact remains that amid continued strong capital spending and relatively optimistic demand outlooks from tech giants, some players in the AI space are clearly emerging as “losers.”