JPMorgan Downgrades PagerDuty and C3.ai
Investing.com — JPMorgan has downgraded both PagerDuty Inc (NYSE:PD) and C3.ai Inc (NYSE:AI) from “neutral” to “underweight”, citing competitive pressures, market dynamics, and valuation concerns.
PagerDuty
PagerDuty’s rating was cut due to what JPMorgan described as "crosscurrents" in the company’s multi-product platform strategy. The brokerage noted increasing competition in PagerDuty’s core market, with major players in observability and IT service management expanding into automation and AI-driven operations.
These shifts could create challenges for PagerDuty, especially in securing favorable contract terms and expanding its customer base. While the company’s existing customers are likely to remain loyal, JPMorgan expressed doubts about PagerDuty’s capacity for significant growth in the near term.
C3.ai
JPMorgan also downgraded AI firm C3.ai, pointing to its financial performance, uneven growth, and slim margins. Although C3.ai has recently improved its revenue growth, JPMorgan highlighted the high costs associated with achieving those gains.
A key strategic partnership with Baker Hughes (NASDAQ:BKR) may expire in April 2025, which presents a potential risk. Although an expanded partnership with Microsoft (NASDAQ:MSFT) could help boost growth, JPMorgan stated it would need to see more evidence of success before revising its outlook.
Confluent
In contrast, the brokerage raised its price target for Confluent, specializing in data streaming technology, by $3 to $38, citing strong growth prospects.
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