C3.ai, Inc. (AI) saw its stock price plummet by 5% in pre-market trading on Monday, despite announcing a $13 million task order from the U.S. Air Force. The sharp decline reflects ongoing investor concerns about the company's business model and financial performance, overshadowing the positive news of the government contract.

The artificial intelligence software provider revealed it had been awarded a $13 million task order to expand its predictive maintenance program across the U.S. Air Force fleet. However, this announcement failed to buoy investor sentiment in the face of broader concerns about the company's prospects.

A recent analysis of C3.ai's performance highlights several challenges facing the company. Despite stabilizing revenue growth, with expectations of 15-25% growth in fiscal 2026, the company continues to grapple with widening losses. Analysts project the net loss to increase from $289 million in fiscal 2025 to $300 million in fiscal 2026, losing nearly $1.65 for every dollar of revenue generated. Additionally, high stock-based compensation, which consumed 59% of revenue in fiscal 2025, and ongoing share dilution remain significant concerns for investors.

The stock's decline also comes amid reports of increased insider selling, with insiders selling more than three times as many shares as they bought over the past 12 months. This selling activity, coupled with the company's persistent profitability challenges, appears to be outweighing the positive news of the Air Force contract in investors' minds, leading to the pre-market selloff.