Wall St Engine
Bernstein Lowers PT on $S to $25 from $27 - Outperform
Analyst comments: "SentinelOne’s FQ1’26 earnings were negatively impacted by macro weakness in April, slipping deals out of the quarter and leaving their guidance beat at just more than 0% (+$1 million) relative to last year’s quarters at 1–3% beats. This was consistent with our channel checks into the quarter. We impute the April weakness primarily impacted their new customer lands, while existing customer expansion remained more consistent. The company reported more of an issue with larger enterprises than smaller.
Our model tweaks up quarter-over-quarter ARR growth in Q2 and lowers second-half revenue as a whole considering DOGE headwinds. Applying a 50/50 ~9x price-to-next-twelve-months revenue multiple from our Rule-of-40 regression, and our DCF model (13% WACC, 3% terminal growth), we reduce our price target to $25 and maintain our Outperform rating."
Analyst: Peter Weed
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Bernstein Lowers PT on $S to $25 from $27 - Outperform
Analyst comments: "SentinelOne’s FQ1’26 earnings were negatively impacted by macro weakness in April, slipping deals out of the quarter and leaving their guidance beat at just more than 0% (+$1 million) relative to last year’s quarters at 1–3% beats. This was consistent with our channel checks into the quarter. We impute the April weakness primarily impacted their new customer lands, while existing customer expansion remained more consistent. The company reported more of an issue with larger enterprises than smaller.
Our model tweaks up quarter-over-quarter ARR growth in Q2 and lowers second-half revenue as a whole considering DOGE headwinds. Applying a 50/50 ~9x price-to-next-twelve-months revenue multiple from our Rule-of-40 regression, and our DCF model (13% WACC, 3% terminal growth), we reduce our price target to $25 and maintain our Outperform rating."
Analyst: Peter Weed
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Wall St Engine
JPMorgan Lowers PT on $AI to $23 from $27 - Neutral
Analyst comments: "C3 .ai reported a slightly mixed quarter, with total revenue landing slightly ahead of expectations, although the outperformance was entirely driven by professional services, while subscription revenue landed 9% below consensus estimates. While total revenue grew 26% year-over-year, steady versus last quarter, subscription revenue grew only 9% year-over-year, marking a deceleration from 22% growth last quarter. Additionally, subscription revenue includes demo licenses, which are perpetual, non-recurring software licenses sold to partners and strategic customers, and represent approximately 40% of subscription revenue, with the strength in those licenses partially masking the softness in core subscription growth. For instance, demo licenses accounted for all of the sequential growth in subscription revenue, excluding which subscription revenue continued to decline sequentially.
Prioritized Engineering Services (PES) revenue—i.e., revenue from customers for custom engineering work to accelerate delivery of features that were already on the product roadmap—came in well ahead of expectations, driving professional services to beat consensus by over 75%, making up for the subscription shortfall. Profitability in the quarter was better than expected, although still in deeply negative territory for operating margins.
Overall, while we believe that C3. ai is going after a massive and rapidly evolving opportunity around Artificial Intelligence, and acknowledge the company has forged a number of solid strategic partnerships, we expect shares to continue to underperform our coverage given the lack of core subscription growth (excluding demo licenses), the lumpiness of the professional services revenue stream, in addition to a relatively poor profitability profile."
Analyst: Pinjalim Bora
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JPMorgan Lowers PT on $AI to $23 from $27 - Neutral
Analyst comments: "C3 .ai reported a slightly mixed quarter, with total revenue landing slightly ahead of expectations, although the outperformance was entirely driven by professional services, while subscription revenue landed 9% below consensus estimates. While total revenue grew 26% year-over-year, steady versus last quarter, subscription revenue grew only 9% year-over-year, marking a deceleration from 22% growth last quarter. Additionally, subscription revenue includes demo licenses, which are perpetual, non-recurring software licenses sold to partners and strategic customers, and represent approximately 40% of subscription revenue, with the strength in those licenses partially masking the softness in core subscription growth. For instance, demo licenses accounted for all of the sequential growth in subscription revenue, excluding which subscription revenue continued to decline sequentially.
Prioritized Engineering Services (PES) revenue—i.e., revenue from customers for custom engineering work to accelerate delivery of features that were already on the product roadmap—came in well ahead of expectations, driving professional services to beat consensus by over 75%, making up for the subscription shortfall. Profitability in the quarter was better than expected, although still in deeply negative territory for operating margins.
Overall, while we believe that C3. ai is going after a massive and rapidly evolving opportunity around Artificial Intelligence, and acknowledge the company has forged a number of solid strategic partnerships, we expect shares to continue to underperform our coverage given the lack of core subscription growth (excluding demo licenses), the lumpiness of the professional services revenue stream, in addition to a relatively poor profitability profile."
Analyst: Pinjalim Bora
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Wall St Engine
Piper Sandler: "Yesterday’s decision is a comprehensive defeat for the administration. Its legal arguments were roundly rejected. ...To side with the White House in this case is to argue the president can declare a bogus national emergency and do almost anything he wants. The CIT was having none of it and we believe it is very likely a comfortable majority of the Supreme Court will take the same position as the three-judge panel."
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Piper Sandler: "Yesterday’s decision is a comprehensive defeat for the administration. Its legal arguments were roundly rejected. ...To side with the White House in this case is to argue the president can declare a bogus national emergency and do almost anything he wants. The CIT was having none of it and we believe it is very likely a comfortable majority of the Supreme Court will take the same position as the three-judge panel."
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Wall St Engine
The New York Times $NYT and Amazon $AMZN just announced an AI licensing deal. The Times has agreed to license its content to Amazon for use in AI platforms https://t.co/86dd3FBv4t
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The New York Times $NYT and Amazon $AMZN just announced an AI licensing deal. The Times has agreed to license its content to Amazon for use in AI platforms https://t.co/86dd3FBv4t
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Wall St Engine
McKinsey has cut more than 10% of its workforce over the past 18 months—the biggest reduction in its 100-year history—bringing headcount down to around 40,000, according to the Financial Times https://t.co/6Oqb4U8hfm
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McKinsey has cut more than 10% of its workforce over the past 18 months—the biggest reduction in its 100-year history—bringing headcount down to around 40,000, according to the Financial Times https://t.co/6Oqb4U8hfm
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Wall St Engine
CITI: 'THE PRESIDENT STILL HAS SEVERAL OPTIONS UNDER US TRADE LAW TO REIMPOSE TARIFFS'
"Last night a federal trade court struck down President Trump’s Reciprocal Tariffs ruling that he had overstepped his authority by invoking the International Emergency Economics Powers Act (IEEPA) to impose tariffs. The court ordered a permanent stop to the tariffs and also barred any future modifications to them giving the Trump administration 10 days to make the changes. Notably, tariffs on products like aluminium and steel were not impacted by the court ruling as the President did not utilize IEEPA powers. The Trump administration immediately appealed the ruling to the US Court of Appeals."
"While this ruling is favorable for our companies (for which we have outlined the tariff headwind incorporated in guidance in Figure 1 below and in a detailed note published last week), we are wary about how the situation will continue to develop from here for which it seems there are options for Trump reimpose tariffs. Where Do We Go From Here: With the Trump administration appealing the Court of International Trade’s decision, it is possible that the Supreme Court may end up reviewing the case."
"However, as we understand it the President still has several options under US trade law to reimpose tariffs including: (1) Section 122 of the Trade Act of 1974, which would allow temporary tariffs for up to 150 days, but which would subsequently require Congressional action, (2) Section 232 tariffs could be expanded to other sectors allows tariffs in response to threats to national security, and (3) the President could start Section 301 investigations on US trading partners or utilize Section 338 which allows the president to impose levies of up to 50% on imports from countries that discriminate against the U.S."
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CITI: 'THE PRESIDENT STILL HAS SEVERAL OPTIONS UNDER US TRADE LAW TO REIMPOSE TARIFFS'
"Last night a federal trade court struck down President Trump’s Reciprocal Tariffs ruling that he had overstepped his authority by invoking the International Emergency Economics Powers Act (IEEPA) to impose tariffs. The court ordered a permanent stop to the tariffs and also barred any future modifications to them giving the Trump administration 10 days to make the changes. Notably, tariffs on products like aluminium and steel were not impacted by the court ruling as the President did not utilize IEEPA powers. The Trump administration immediately appealed the ruling to the US Court of Appeals."
"While this ruling is favorable for our companies (for which we have outlined the tariff headwind incorporated in guidance in Figure 1 below and in a detailed note published last week), we are wary about how the situation will continue to develop from here for which it seems there are options for Trump reimpose tariffs. Where Do We Go From Here: With the Trump administration appealing the Court of International Trade’s decision, it is possible that the Supreme Court may end up reviewing the case."
"However, as we understand it the President still has several options under US trade law to reimpose tariffs including: (1) Section 122 of the Trade Act of 1974, which would allow temporary tariffs for up to 150 days, but which would subsequently require Congressional action, (2) Section 232 tariffs could be expanded to other sectors allows tariffs in response to threats to national security, and (3) the President could start Section 301 investigations on US trading partners or utilize Section 338 which allows the president to impose levies of up to 50% on imports from countries that discriminate against the U.S."
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