Walk through the halls of any major trading floor right now, and you'll hear the same ticker mentioned with a mix of exhaustion and opportunism: AI. No, not the technology in general—the company. C3.ai has become a lightning rod for skepticism.
Investors are literally putting billions on the line to bet that this stock will fail. It’s wild. As of mid-January 2026, C3 ai stock short interest sits at a staggering 30.20% of its float. That means nearly a third of all available shares are being borrowed and sold by people who think the price is heading for the basement.
Why the hate? Honestly, it’s a mess of bad timing, health scares, and a "pivot" that feels like it’s taking forever.
The 30% Problem: Breaking Down the Numbers
Most companies get nervous when short interest hits 10%. When it hits 30%, it’s basically a declaration of war.
Right now, 39.45 million shares of C3.ai are held short. To put that in perspective, the days-to-cover ratio is currently 6.28. If every short seller tried to buy back their shares tomorrow to close their positions, it would take them over six full days of average trading volume to get out. That is a massive bottleneck.
- Short Interest % of Float: 30.20%
- Total Shares Short: 39.45 Million
- Days to Cover: 6.28
- Borrow Fee: 0.27% to 0.39% (relatively low, surprisingly)
The borrow fee is an interesting quirk. Usually, when everyone wants to short a stock, the fee to borrow those shares skyrockets. But at 0.27%, it’s still cheap to bet against C3.ai. This suggests that while the sentiment is overwhelmingly bearish, there isn't a massive supply crunch for the shares—yet.
Why the bears are winning
The bear case isn't just "vibes." It’s rooted in some pretty ugly financial realities. In its fiscal second quarter of 2026 (the one ending October 31, 2025), the company reported a GAAP net loss of $0.75 per share.
Revenue actually dropped 20% year-over-year to $75.1 million. Think about that for a second. We are in the middle of the biggest AI gold rush in history, and a company named "AI" is seeing its revenue shrink. That’s the core of the C3 ai stock short interest surge. Shorts look at those numbers and see a company that is missing the party.
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The Siebel Departure and the Successor Struggle
You can't talk about C3.ai without talking about Tom Siebel. The guy is a legend in Silicon Valley. He founded Siebel Systems, sold it to Oracle, and then basically invented the enterprise AI category.
But 2025 was a brutal year for him. In August, he had to come clean about some serious health issues—autoimmune disease, hospitalizations, and vision impairment. He admitted his absence led to "completely unacceptable" sales results.
In September 2025, Siebel stepped down. Stephen Ehikian took the reins as CEO.
Ehikian is trying. He really is. He’s leaning hard into "Agentic AI" and the federal business, which actually grew 89% recently. But the market is impatient. Transitioning from a legendary founder-CEO to a "turnaround" CEO while revenue is cratering is a recipe for high short interest.
The Federal Growth Paradox
One thing the shorts might be overlooking—or at least underestimating—is the government work.
C3.ai closed 46 agreements last quarter. A huge chunk of that was defense and aerospace. They are working with the U.S. Air Force, the Navy, and even major commercial players like AMD and GSK.
If the federal business keeps growing at nearly 90%, it eventually becomes too big to ignore. But right now, the losses are just so much louder than the bookings. The company expects to lose between $180 million and $210 million this fiscal year. When you're losing $200 million a year, a "strong federal pipeline" sounds like a consolation prize to many on Wall Street.
Is a Short Squeeze Actually Possible?
This is the million-dollar question. When C3 ai stock short interest is this high, retail traders on Reddit and Twitter start smelling blood. They look for a "short squeeze"—a situation where a bit of good news forces all those short sellers to buy back shares at once, sending the price to the moon.
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Could it happen here? Maybe. But it would need a massive catalyst.
The analysts are not helping. Out of 30 analysts following the stock, 16 have it as a "Hold" and 9 have it as a "Sell." Only 5 are brave enough to say "Buy." Morgan Stanley and J.P. Morgan both have "Sell" ratings with price targets as low as $11.
If C3.ai reports a surprise profit—or even just revenue growth that beats expectations—the shorts will scramble. But with guidance suggesting a 23% revenue decline for the full year 2026, that surprise feels a long way off.
What Most People Get Wrong About the Valuation
People look at the stock price—sitting around $13.04—and think it's "cheap." It’s down 60% from its 52-week high.
But "cheap" is relative. The stock is still trading at roughly 5 to 6 times sales. Compare that to some of its peers in the IT services sector that trade at 2 or 3 times sales, and C3.ai still looks expensive to a value investor.
The shorts are betting that the "AI premium" is finally evaporating. They believe the company should be valued like a struggling software firm, not a high-flying tech darling.
The Partner Ecosystem: A Double-Edged Sword
C3.ai loves to talk about its partners. 89% of their bookings come through the partner ecosystem—Microsoft Azure, AWS, Google Cloud, and Baker Hughes.
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Bulls say this is "operating leverage." It means C3.ai doesn't have to hire thousands of salespeople because Microsoft is doing the selling for them.
Bears see it differently. They argue that if Microsoft or AWS decides to prioritize their own in-house AI tools (which they are doing), C3.ai gets sidelined. Relying on your competitors to sell your product is a risky game.
Navigating the C3 AI Stock Short Interest: Actionable Insights
If you're looking at this stock, you have to decide which side of the fence you're on. There isn't much middle ground here.
- For the Bulls: The federal business is the only reason to stay. If you believe the U.S. government is standardizing on C3.ai's platform for defense, the current price is a steal. You're essentially betting on a massive short squeeze once the revenue from these federal contracts finally hits the GAAP reports.
- For the Bears: The trend is your friend. Revenue is down, losses are up, and the founder is gone. Until the company shows it can grow revenue without burning hundreds of millions of dollars, the short position remains the dominant trade.
- The "Wait and See" Approach: Most institutional investors are doing exactly this. They are waiting for the Q3 2026 results (expected in March) to see if the sales reorganization under Ehikian is actually working.
Keep an eye on the "Days to Cover." If that number starts climbing toward 10, the pressure on short sellers will become immense. Conversely, if the short interest starts dropping while the price stays flat, it means the "smart money" is quietly exiting their bearish bets, which usually precedes a period of boring, sideways trading.
The bottom line? C3.ai is no longer a "growth" story; it's a "survival and turnaround" story. And in 2026, the market doesn't give much grace to turnaround stories that aren't actually turning around yet.
Check the latest exchange-reported short interest data every two weeks. If the percentage of float drops below 20% without a corresponding price spike, the "squeeze" thesis is likely dead. If it stays above 30% while the stock stabilizes around $13, the tension is building for a major move in either direction.