Shares of C3.ai (NYSE: AI) were sinking 10.7% lower as of 10:51 a.m. ET on Thursday and fell as much as 13.9% earlier in the day. The sell-off came after the enterprise artificial intelligence (AI) application software company announced its fiscal 2024 second-quarter results following the market close on Wednesday.

C3.ai reported fiscal Q2 revenue of $73.2 million. While this figure reflected a year-over-year increase of 17%, it fell short of the consensus Wall Street revenue estimate of $74.3 million.

The company posted an adjusted net loss of $0.13 per share, compared to a loss of $0.11 per share in the prior-year period. Despite the deteriorating bottom line, C3.ai still managed to beat the average analysts’ estimate of a loss of $0.18 per share.

What investors especially disliked about C3.ai’s update

Mixed quarterly results aren’t great, but they don’t always cause a stock to decline as much as C3.ai is sinking. However, there’s more to the story. Investors especially disliked the company’s near-term financial outlook.

C3.ai said that it expects fiscal 2024 third-quarter revenue will be between $74 million and $78 million. The midpoint of that range is below the consensus estimate of $77.7 million. The AI software company also projected full-year revenue of between $295 million and $320 million. The midpoint of this range is only slightly below the average Wall Street estimate of $307.9 million.

Is C3.ai stock a buy on the pullback?

With today’s decline, C3.ai stock has plunged more than 40% below its peak set in June. Is it a buy on the pullback? I don’t think so.

Even with the lower price tag, C3.ai’s shares still trade at a price-to-sales ratio of nearly 12. The company remains unprofitable. I wouldn’t be surprised if C3.ai bounces back somewhat. However, my view is that there are much better AI stocks to buy that offer greater risk-reward propositions.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.