C3 AI Reports Weak Q1 2026 Results as Chairperson Criticizes Performance, New CEO Named

C3 AI, the enterprise-focused artificial intelligence company best known for its pre-built AI applications and generative AI tools, delivered a highly disappointing fiscal Q1 2026 update that shook both investors and management alike.

Shares dropped nearly 12 percent in after-hours trading as the company revealed a weaker-than-expected earnings report, a gloomy outlook for the next quarter, and a surprise CEO transition.

For context, C3 AI has positioned itself as a turnkey provider of AI-driven solutions for corporations. The company currently operates two major platforms: an agentic AI system, which provides low-code and no-code applications to automate day-to-day business processes, and a generative AI platform designed to integrate large language models (LLMs) with enterprise datasets. These products are marketed as ready-to-deploy solutions for enterprises looking to modernize workflows and reduce operational inefficiencies.

The financial results, however, painted a very different picture. C3 AI reported revenues of just $70.3 million, falling far short of Wall Street’s expectation of $94.5 million. Its earnings per share came in at -0.37 dollars, a miss compared to the consensus forecast of -0.20. Even the gross margin disappointed: the company posted a non-GAAP gross profit of $36.3 million, which translated to a 52 percent margin – healthy on paper, but below what investors had hoped to see. To make matters worse, guidance for the second quarter was drastically lighter than expected. C3 AI projected revenues of between $72 million and $80 million, well below the consensus estimate of nearly $100 million. The company also withheld further guidance for Q3 and the full fiscal year, a move that rattled analysts who prefer clarity in growth trajectories.

Despite this grim financial backdrop, C3 AI did announce a significant leadership change. Stephen Ehikian, an industry veteran with deep AI expertise, has been appointed as the new CEO effective September 1, 2025. His arrival is seen as a potential stabilizing force as the company attempts to pivot from turbulence back toward growth. Management stressed that restructuring efforts have now been completed, theoretically clearing the path for renewed momentum.

The most striking moment came during the company’s earnings call, when Chairperson Thomas Siebel publicly lambasted the results, calling them “completely unacceptable in virtually every respect.” Siebel attributed much of the underperformance to the disruption caused by restructuring, which created confusion within sales channels, and his own illness, which limited his ability to oversee operations at a critical time. While unusually blunt, his comments reflect the urgency at C3 AI to regain investor trust and prove its enterprise AI strategy is viable.

Adding to the drama, Siebel openly challenged a recent report from MIT that claimed 95 percent of generative AI projects within enterprises were failing to generate meaningful returns. Contradicting those findings, Siebel insisted that the majority of C3 AI’s generative AI deployments were not only functional but successful, highlighting the company’s integrated approach and full-stack solutions as key differentiators in a crowded market. According to Siebel, C3 AI’s clients are seeing real, measurable benefits from adopting its platforms, a narrative he hopes will counter investor pessimism.

Ultimately, while C3 AI’s Q1 results were a painful setback, the company’s leadership insists that the worst may be behind them. With restructuring finished, a new CEO stepping in, and a firm belief in the strength of its AI offerings, C3 AI is trying to convince both customers and Wall Street that it is ready to reignite its growth story in the second half of fiscal 2026. Whether investors buy into that optimism remains an open question.