JP Morgan downgrades PagerDuty and C3.ai on market dynamics

Investing.com — JPMorgan 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’s rating was cut from due to what JPMorgan described as “crosscurrents” in the company’s multi-product platform strategy. Brokerage noted increasing competition in PagerDuty’s core market, with large players in observability and IT service management expanding into automation and artificial intelligence-driven operations.

These shifts could create challenges for PagerDuty, particularly in securing favorable contract terms and growing its customer base. While the company’s existing customers are likely to remain loyal, JPMorgan expressed doubts about PagerDuty’s ability to achieve significant growth in the near term.

JPMorgan downgraded AI firm C3.ai pointing to its financial performance, uneven growth and slim margins. While C3.ai has recently improved its revenue growth, JPMorgan pointed out the high costs associated with achieving those gains.

Additionally, a key strategic partnership with Baker Hughes (NASDAQ:BKR) may expire in April 2025, posing a potential risk.

Although an expanded partnership with Microsoft (NASDAQ:MSFT) could help boost growth, JPMorgan said it would need to see more evidence of success before revising its outlook.

While brokerage raised its price target for Confluent, which specializes in data streaming technology, by $3 to $38 on strong growth prospects.