Despite surging nearly 80% this year, Wolfe Research expects slowing growth concerns to weigh on C3.ai in the months ahead. Analyst Joshua Tilton downgraded the popular artificial intelligence stock benefitting from the push toward generative AI , citing risks to long-term growth 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 note, casting doubt on management’s goal to exit 2024 with operating profitability and 30% revenue growth. Shares fell more than 4% before the bell. In 2023, the stock has soared 79.3%, as companies across sectors bet on the AI revolution following ChatGPT’s market debut. Central to Tilton’s downgrade is the fear that C3.ai’s transition to a consumption model would require “near-perfect execution and rates of adoption” to attain management’s 30% revenue growth goal. A recent change in its agreement with Baker Hughes also means that revenues outside of the oil field services company will need to be “materially higher than what has been realized this year,” Tilton said. To hit 20% consensus 2024 revenue growth forecasts, the analyst also estimates that C3.ai would need to grow revenues unrelated to Baker Hughes by 28.3%, representing the largest year-over-year increase on record. AI YTD mountain Share performance 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 placed a $14 price target on shares and revised the firm’s full-year 2024 growth outlook to 11%, below the 20% consensus expectation. The target price reflects 30% downside from Friday’s close. Wolfe Research recently named the company among a list of stocks with deteriorating earnings to short heading into the reporting season. — CNBC’s Michael Bloom contributed reporting