Despite surging almost 80% this 12 months, Wolfe Research expects slowing development issues to weigh on C3.ai within the months forward. Analyst Joshua Tilton downgraded the favored synthetic intelligence stock benefitting from the push towards generative AI , citing dangers to long-term development expectations. “We remain skeptical of AI’s ability to hit its FY24 targets and are not willing to underwrite material revenue uplift from its planned transition to a consumption model,” he wrote in a Sunday notice, casting doubt on administration’s purpose to exit 2024 with working profitability and 30% income development. Shares fell greater than 4% earlier than the bell. In 2023, the stock has soared 79.3%, as firms throughout sectors guess on the AI revolution following ChatGPT’s market debut. Central to Tilton’s downgrade is the concern that C3.ai’s transition to a consumption mannequin would require “near-perfect execution and rates of adoption” to achieve administration’s 30% income development purpose. A latest change in its settlement with Baker Hughes additionally implies that revenues outdoors of the oil subject providers firm will must be “materially higher than what has been realized this year,” Tilton stated. To hit 20% consensus 2024 income development forecasts, the analyst additionally estimates that C3.ai would wish to develop revenues unrelated to Baker Hughes by 28.3%, representing the biggest year-over-year enhance on document. AI YTD mountain Share efficiency in 2023 “Excluding the BKR-related revenue, we lack confidence in underwriting higher revenue growth for FY24 as it would imply a step up in non-BKR-related revenue despite C3.ai customer count growth slowing significantly in FY23, which we believe either implies longer renewal cycles or elevated churn levels in its existing customer base,” Tilton wrote. Along with the downgrade, Tilton positioned a $14 worth goal on shares and revised the agency’s full-year 2024 development outlook to 11%, beneath the 20% consensus expectation. The goal worth displays 30% draw back from Friday’s shut. Wolfe Research not too long ago named the corporate amongst an inventory of shares with deteriorating earnings to brief heading into the reporting season. — CNBC’s Michael Bloom contributed reporting