Software Sector Faces Worst Drawdown in a Decade
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
0mins
Should l Buy AI?
Source: Benzinga
- Severe Market Drawdown: The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) has fallen for seven consecutive sessions, resulting in a 16% drop, marking the worst performance since the COVID panic in 2020, indicating immense pressure on the software sector.
- Widespread Negative Returns: Year to date, 100 out of 110 constituents in the software sector have posted negative returns, with over 20 stocks down more than 30%, reflecting growing concerns about the sustainability of software business models.
- Deteriorating Technical Indicators: A striking 97 of the IGV ETF's constituents are trading below their 200-day moving average, highlighting a broad breakdown in technical momentum, while the 14-day RSI has plummeted to 16, the lowest since September 2001, indicating extreme market pessimism.
- Pressure from Business Model Shifts: Macro strategists have noted that the rise of AI tools is replacing expensive SaaS platforms, leading to pricing pressures, slower renewals, and declining customer retention, prompting investors to rethink growth and value in the AI era.
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Analyst Views on AI
Wall Street analysts forecast AI stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AI is 30.45 USD with a low forecast of 18.00 USD and a high forecast of 50.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
13 Analyst Rating
4 Buy
6 Hold
3 Sell
Hold
Current: 10.150
Low
18.00
Averages
30.45
High
50.00
Current: 10.150
Low
18.00
Averages
30.45
High
50.00
About AI
C3.ai, Inc. is an enterprise artificial intelligence (AI) application software company. The Company has built a solution that enables its customers to rapidly develop, deploy, and operate enterprise AI applications. It offers families of software solutions, which it collectively refers to as its C3 AI software: The C3 AI Platform, C3 AI Applications, and C3 Generative AI. The C3 AI Platform, its core technology, is a comprehensive, end-to-end application development and runtime environment that is designed to allow its customers to rapidly design, develop, and deploy Enterprise AI applications of any type. Its C3 AI Applications, built using the C3 AI Platform, is a portfolio of pre-built, extensible, industry-specific, and application-specific software-as-a-service offerings (SaaS) Enterprise AI applications that can be rapidly installed and deployed. Its C3 Generative AI combines the utility of large language models, generative AI, reinforcement learning, natural language processing.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Software Sector Faces Worst Drawdown in a Decade
- Severe Market Drawdown: The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) has fallen for seven consecutive sessions, resulting in a 16% drop, marking the worst performance since the COVID panic in 2020, indicating immense pressure on the software sector.
- Widespread Negative Returns: Year to date, 100 out of 110 constituents in the software sector have posted negative returns, with over 20 stocks down more than 30%, reflecting growing concerns about the sustainability of software business models.
- Deteriorating Technical Indicators: A striking 97 of the IGV ETF's constituents are trading below their 200-day moving average, highlighting a broad breakdown in technical momentum, while the 14-day RSI has plummeted to 16, the lowest since September 2001, indicating extreme market pessimism.
- Pressure from Business Model Shifts: Macro strategists have noted that the rise of AI tools is replacing expensive SaaS platforms, leading to pricing pressures, slower renewals, and declining customer retention, prompting investors to rethink growth and value in the AI era.
See More
Musk Considers Merging His Business Empire
- Potential Merger Plans: Elon Musk is reportedly considering merging SpaceX, Tesla, and xAI, with a SpaceX-Tesla deal potentially leveraging Tesla's energy storage and solar capabilities for space infrastructure, enhancing synergies in both space and energy sectors.
- Investment Context: Tesla's recent $2 billion investment in xAI not only underscores its commitment to the AI sector but may also lay the groundwork for future mergers, further driving technological integration and market competitiveness.
- IPO Considerations: While SpaceX is exploring an IPO, Musk's merger plans could impact investor confidence in SpaceX's independent growth trajectory, potentially causing short-term fluctuations in its stock price.
- Industry Dynamics: In other M&A news, Mitsubishi Electric completed its $1 billion acquisition of cybersecurity firm Nozomi Networks, reflecting ongoing market interest in technology and security integrations, which may provide insights for Musk's merger considerations.
See More
C3.ai Shares Enter Oversold Territory
- Oversold Signal: C3.ai's stock price fell to $11.065 per share on Friday, resulting in an RSI of 29.3, indicating an oversold condition that may attract bullish investors looking for buying opportunities.
- Market Comparison: Compared to the S&P 500 ETF's (SPY) RSI of 54.4, C3.ai's low RSI suggests that the recent selling pressure may be easing, potentially providing investors with a rebound opportunity.
- Historical Performance: C3.ai's 52-week low is $11.065, while the high is $35.98, with the current trading price at $11.35, indicating that the stock is hovering at a low level, which may attract value investors' attention.
- Investor Sentiment: While the current stock price is low, investors should carefully assess market sentiment and fundamentals to determine whether to enter at this time, avoiding potential further downside risks.
See More
C3.ai Shares Decline Amid Merger Talks with Automation Anywhere
- Merger Rumors Impact Stock: C3.ai shares fell 1.80% on Friday, giving back nearly 16% gains from Wednesday due to merger speculation, indicating market caution regarding the potential deal's impact.
- Financial Performance Improvement: In December, C3.ai reported quarterly revenue of approximately $75 million, exceeding expectations, primarily driven by growth in its federal government business, suggesting enhanced competitiveness in securing high-value contracts.
- Leadership Changes: Founder Thomas Siebel stepped down as CEO, and C3.ai is reportedly weighing strategic alternatives, including a potential sale, which may affect investor confidence in the company's future prospects.
- Technical Indicators Show Pressure: C3.ai is currently trading 16.3% below its 20-day simple moving average and 28.7% below its 100-day simple moving average, indicating struggles with both short-term and long-term trends, with shares down approximately 65.13% over the past 12 months.
See More
Analysis of Declining Stocks: C3.ai and The Trade Desk
- C3.ai Performance Decline: C3.ai's stock has plummeted 61% over the past year, with total revenue declining by 20% to $145.4 million for the six months ending October 31, 2025, indicating a lack of growth in the AI sector that undermines investor confidence.
- Management Changes Impact: The recent CEO transition from founder Thomas Siebel to Stephen Ehikian raises concerns about stability, potentially exacerbating market worries about the company's future performance and leading to continued stock pressure.
- The Trade Desk Competitive Challenges: The Trade Desk's stock has fallen 72% in the past year, as clients may cut ad spending amid growing economic uncertainty, further impacting the company's revenue and market share.
- Declining Growth Rate Risks: The Trade Desk's growth rate has decreased from 27% to 18%, which, in the context of its high valuation, may lead investors to question its future profitability, especially with frequent management changes eroding market confidence.
See More
C3.ai in Merger Talks with Automation Anywhere
- Stock Movement: C3.ai's stock rose 2.1% by 9:50 a.m. ET on Wednesday, reflecting market optimism regarding rumored merger talks with Automation Anywhere, although the deal remains unconfirmed and could affect investor sentiment.
- Market Valuation: Automation Anywhere was privately valued at $6.8 billion in 2019, while C3.ai's current valuation stands at only $1.8 billion, indicating a significant valuation gap that suggests a potential buyout rather than a true merger if the deal proceeds.
- Financial Performance: C3.ai reported losses of $381 million over the past year, with analysts forecasting no improvement in its financial outlook for the foreseeable future, indicating that even a successful merger may not alleviate ongoing financial pressures.
- Cash Flow Situation: With $675 million in cash reserves and an annual cash burn of $93 million, C3.ai is projected to last seven years before running out of funds, but continued losses without a buyout could exacerbate its financial challenges.
See More
Software Sector Faces Worst Drawdown in a Decade
- Severe Market Drawdown: The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) has fallen for seven consecutive sessions, resulting in a 16% drop, marking the worst performance since the COVID panic in 2020, indicating immense pressure on the software sector.
- Widespread Negative Returns: Year to date, 100 out of 110 constituents in the software sector have posted negative returns, with over 20 stocks down more than 30%, reflecting growing concerns about the sustainability of software business models.
- Deteriorating Technical Indicators: A striking 97 of the IGV ETF's constituents are trading below their 200-day moving average, highlighting a broad breakdown in technical momentum, while the 14-day RSI has plummeted to 16, the lowest since September 2001, indicating extreme market pessimism.
- Pressure from Business Model Shifts: Macro strategists have noted that the rise of AI tools is replacing expensive SaaS platforms, leading to pricing pressures, slower renewals, and declining customer retention, prompting investors to rethink growth and value in the AI era.
See More
Musk Considers Merging His Business Empire
- Potential Merger Plans: Elon Musk is reportedly considering merging SpaceX, Tesla, and xAI, with a SpaceX-Tesla deal potentially leveraging Tesla's energy storage and solar capabilities for space infrastructure, enhancing synergies in both space and energy sectors.
- Investment Context: Tesla's recent $2 billion investment in xAI not only underscores its commitment to the AI sector but may also lay the groundwork for future mergers, further driving technological integration and market competitiveness.
- IPO Considerations: While SpaceX is exploring an IPO, Musk's merger plans could impact investor confidence in SpaceX's independent growth trajectory, potentially causing short-term fluctuations in its stock price.
- Industry Dynamics: In other M&A news, Mitsubishi Electric completed its $1 billion acquisition of cybersecurity firm Nozomi Networks, reflecting ongoing market interest in technology and security integrations, which may provide insights for Musk's merger considerations.
See More
C3.ai Shares Enter Oversold Territory
- Oversold Signal: C3.ai's stock price fell to $11.065 per share on Friday, resulting in an RSI of 29.3, indicating an oversold condition that may attract bullish investors looking for buying opportunities.
- Market Comparison: Compared to the S&P 500 ETF's (SPY) RSI of 54.4, C3.ai's low RSI suggests that the recent selling pressure may be easing, potentially providing investors with a rebound opportunity.
- Historical Performance: C3.ai's 52-week low is $11.065, while the high is $35.98, with the current trading price at $11.35, indicating that the stock is hovering at a low level, which may attract value investors' attention.
- Investor Sentiment: While the current stock price is low, investors should carefully assess market sentiment and fundamentals to determine whether to enter at this time, avoiding potential further downside risks.
See More
C3.ai Shares Decline Amid Merger Talks with Automation Anywhere
- Merger Rumors Impact Stock: C3.ai shares fell 1.80% on Friday, giving back nearly 16% gains from Wednesday due to merger speculation, indicating market caution regarding the potential deal's impact.
- Financial Performance Improvement: In December, C3.ai reported quarterly revenue of approximately $75 million, exceeding expectations, primarily driven by growth in its federal government business, suggesting enhanced competitiveness in securing high-value contracts.
- Leadership Changes: Founder Thomas Siebel stepped down as CEO, and C3.ai is reportedly weighing strategic alternatives, including a potential sale, which may affect investor confidence in the company's future prospects.
- Technical Indicators Show Pressure: C3.ai is currently trading 16.3% below its 20-day simple moving average and 28.7% below its 100-day simple moving average, indicating struggles with both short-term and long-term trends, with shares down approximately 65.13% over the past 12 months.
See More
Analysis of Declining Stocks: C3.ai and The Trade Desk
- C3.ai Performance Decline: C3.ai's stock has plummeted 61% over the past year, with total revenue declining by 20% to $145.4 million for the six months ending October 31, 2025, indicating a lack of growth in the AI sector that undermines investor confidence.
- Management Changes Impact: The recent CEO transition from founder Thomas Siebel to Stephen Ehikian raises concerns about stability, potentially exacerbating market worries about the company's future performance and leading to continued stock pressure.
- The Trade Desk Competitive Challenges: The Trade Desk's stock has fallen 72% in the past year, as clients may cut ad spending amid growing economic uncertainty, further impacting the company's revenue and market share.
- Declining Growth Rate Risks: The Trade Desk's growth rate has decreased from 27% to 18%, which, in the context of its high valuation, may lead investors to question its future profitability, especially with frequent management changes eroding market confidence.
See More
C3.ai in Merger Talks with Automation Anywhere
- Stock Movement: C3.ai's stock rose 2.1% by 9:50 a.m. ET on Wednesday, reflecting market optimism regarding rumored merger talks with Automation Anywhere, although the deal remains unconfirmed and could affect investor sentiment.
- Market Valuation: Automation Anywhere was privately valued at $6.8 billion in 2019, while C3.ai's current valuation stands at only $1.8 billion, indicating a significant valuation gap that suggests a potential buyout rather than a true merger if the deal proceeds.
- Financial Performance: C3.ai reported losses of $381 million over the past year, with analysts forecasting no improvement in its financial outlook for the foreseeable future, indicating that even a successful merger may not alleviate ongoing financial pressures.
- Cash Flow Situation: With $675 million in cash reserves and an annual cash burn of $93 million, C3.ai is projected to last seven years before running out of funds, but continued losses without a buyout could exacerbate its financial challenges.
See More
