3 AI Stocks in Correction Mode: Can They Rebound?

They say a rising tide lifts all boats, but not every company in the artificial intelligence industry today would agree. Yes, you’ve got big winners in semiconductors, software, and hardware spreading across the market as AI capital expenditures continue to grow at eye-popping rates.

Even the companies that make data center A/C units are seeing their stocks rise this year.

However, not every company in the AI space is partying like it’s 2001. Poor earnings have been punished in Q2, and some companies reporting less-than-stellar numbers have been crushed into correction. Today, we’ll examine three AI stocks that are down at least 10% over the last month to see if the declines are deserved or overdone.

3 Stocks Down Big in the Last 30 Days: Are The Lows In?

Attempting to catch a falling knife is a lot like splitting 10s in blackjack: exhilarating when you win, but shameful if you lose. These stocks dropped for a reason, and if you want to call the bottom, you’ll need fundamental and technical factors in your favor. Market timing is always tricky, so ensure your risk tolerance and investment goals are aligned with these stocks.

C3.ai: A Technical and Fundamental Breakdown

How can C3.ai Inc. (NYSE: AI), the company that managed to grab the coveted AI stock symbol, struggle when investors are going crazy for all things AI? A Death Cross followed by a series of earnings disasters is a good place to start.

The company reported fiscal Q4 2025 numbers after the close on May 28, and while EPS and revenue beat analysts’ expectations, losses expanded year-over-year (YOY), and it cut FY 2026 revenue guidance to a range of $447.5 million to $484.5 million.

The $40 million gap in high and low-end revenue projections was larger than usual, which CEO Thomas Siebel blamed on an unpredictable macroeconomic environment. Analysts weren’t convinced, and the stock faced several downgrades and price cuts in the days after the report.

Broad tailwinds in the tech sector brought the stock back above its 50 and then 200-day moving averages, but support began to break down in late July, and the stock declined for seven consecutive days.

The share price plunged below two previous areas of support at the 200- and 50-day MAs, and we now know why. Technically savvy investors had sniffed out more earnings drama in the days before the company released a preliminary earnings report that sent the stock plummeting another 25%.

How bad is the news if you’re releasing a preliminary report? Somewhere between awful and catastrophic. On August 11, the company warned investors that Q1 2026 revenue was likely to come in around $70 million, a figure more than 30% lower than its previous projection.

The surprisingly sour data triggered another wave of downgrades and price reductions, including a new Street low of $13 from DA Davidson. The stock has rebounded 10% since the sell-off, but the company has much to prove to investors before this can be considered anything but a dead cat bounce.

Innodata: Anxious Investors or Profit Taking?

Innodata Inc. (NASDAQ: INOD) didn’t have the earnings catastrophe that C3.ai did, but its Q2 report didn’t have investors popping champagne bottles either.

The company’s July 31 release saw EPS beat estimates, but revenue numbers were lukewarm despite more than 79% YOY growth.

The company also raised its FY 2025 organic revenue projections to 45% from 40% in response to new business agreements signed between the Q1 and Q2 releases.

A quick 10% drop following a guidance raise is unusual activity, and the sell-off in INOD shares could be profit-taking in response to its elevated valuation (forward P/E ratio of 53.3).

Long-term technical trends still support the consensus Buy rating on the stock. The price bounced off the 200-day MA earlier this week, which had previously been a level where buyers flocked in. A move back above the 50-day MA would further confirm that the uptrend remains intact, making it a critical area to watch in the weeks ahead.

Confluent: Weak Guidance Overshadows Earnings Beat

Software and data provider Confluent Inc. (NASDAQ: CFLT) went public in 2021 during the nadir of the post-COVID stock rally.

After rallying more than 100% in its first few months of trading, the stock lost nearly 80% of its value when the Fed raised rates and the bear market of 2022 began.

Fast-forward to 2025, and the stock is still languishing, down 38% YTD.

Investors hoping for a momentum change following April’s Death Cross formation had their hopes dashed by the company’s Q2 earnings release on July 30.

Confluent’s 9-cent EPS and $282 million revenue figure beat analyst expectations, and subscription revenue grew 21% YOY. But CFO Rohan Sivaram warned on the conference call that Confluent Cloud growth rates will be slower in the second half of 2025 compared to previous years. Despite the initially rosy picture, the report earned the stock three analyst downgrades and 11 price reductions.

The disappointing guidance on the Cloud segment hammered the stock in the succeeding sessions, shattering a previously strong 50-day MA support level. CFLT shares dropped nearly 33% the day following the earnings report, and much like C3.ai, the company will need to prove itself to win back jaded investors and analysts.

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