C3.ai rises even as Needham downgrades on 'necessary' shift, but challenges remain
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C3.ai (NYSE:AI) shares rose on Friday even after investment firm Needham downgraded the artificial intelligence software company, calling its shift to a consumption model "necessary," but difficulties lie ahead.
Analyst Mike Cikos lowered his rating to hold from buy, noting that the shift to consumption from subscription requires a "pivot" in monetization and is challenging. 
"We believe the strategy shift is necessary, as C3's 'elephant-hunting' "for up to $50 Million deals falls flat in the current macro," Cikos wrote in a note to clients, adding that these types of transitions are "challenging, time-consuming and require a [re-think] throughout the entire organization."
C3.ai (AI) shares rose 0.5% to $14.60 in premarket trading.
Earlier this week, C3.ai (AI) reported fiscal first-quarter revenue that missed estimates and provided a weak outlook.
The company also said it was transitioning from subscription-based business model to one based on its customers' usage levels, similar to ones used by Snowflake (SNOW), Microsoft's Azure (MSFT) and Google Cloud (GOOG) (GOOGL).
Analysts are overwhelmingly wary of C3.ai (AI). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AI a HOLD.