Following last month’s tech stock selloff, scores of high quality names have fallen to “can’t miss prices.” Pushed down by market uncertainties, not fundamentals, now may be the time to scoop some of them up for your portfolio. However, that’s not the case for C3.ai (NYSE:AI) stock.

A provider of enterprise artificial intelligence (AI) software, C3.ai’s latest pullback was relatively modest compared to other big dives experienced earlier in 2021. Skyrocketing in price, right out of the gate after its initial public offering (IPO), the stock took a hard plunge from as much as $176.94 per share, down to around $60 per share, in early spring.

Then, it went on a continued slide, down to around $45 per share by November. Since then, when the tech stock selloff began, it’s now plunged to around $27.24 per share. After a nearly 84% plunge, you may believe it’s now in bargain territory. Unfortunately, instead of being a great “buy the dip” situation, as they say, buying it now could be more like trying to catch a falling knife.

Why is that the case, and why is it best to avoid it? Let’s dive in and find out.

AI Stock at a Glance

Like I mentioned above, C3.ai wasn’t always such a poor performing stock. Going public at $42 per share, it soared more than 130% on its first day of trading. Continuing to spike, it briefly pulled back, before surging once again in February 2021, hitting its above-mentioned all-time high of $176.94 per share.

Looking back, it’s easy to see why there was so much excitement around AI stock. For one, its founder was a well-respected tech entrepreneur (Tom Siebel) at the helm. In addition, at the time excitement was ratcheting up for AI/data analytics plays. With its plan to expand beyond its original customer base of energy companies, and pursue a much larger total addressable market (TAM), it seemed like a winner.

But not too long after the market’s exuberance for it peaked, it became clear shares moved up too far, too fast. As InvestorPlace’s Bret Kenwell pointed out in his Dec. 29 article on it, at its all-time high, C3.ai was trading for 100x sales (not earnings). Even as it was seeing its revenue growth accelerate, such a valuation was far from warranted.

Yet it was more than just a rich valuation that caused it to experience such a dramatic price decline. Over the past year, the hype around it has largely evaporated. There’s a big risk this continues, as its actual results keep on falling short of expectations.

C3.AI Has Much to Prove

Much of the pullback with AI stock stemmed from its rate of growth (while above-average) not being enough to sustain its high valuation. Along with this, in recent months, another factor has been playing a role. That would be the cracking of the “story” behind it.

Again, the narrative crafted around it was that it was on the verge of moving beyond its existing customer base. As seen in the most recent quarterly results, that’s clearly a matter for debate. For the September quarter, sales growth was strong, with revenue rising 41% year-over-year. Remaining performance obligations (RPO), another metric used to assess this company’s performance, was up an even larger amount (74% year-over-year).

However, this big increase in RPO came from the expansion of its relationship with a long standing customer, a large oil services company. Some analysts, like BofA’s Brad Sills, see this as a sign that the C3.AI is facing execution issues. In short, the company still needs to prove that strategy is starting to pay off.

Sure, since it last released numbers, there’s been another development that suggests that this is the case. On Dec. 9, the AI services provider announced it inked a 5 year Production-Other transaction agreement with the U.S. Department of Defense (DoD), worth up to $500 million. At first glance this sounds like another $500 million to add to the company’s RPO figure, but there’s a bit of a catch. This isn’t a contract for $500 million. Instead, this agreement gives the DoD the ability to buy up to $500 million in services from the company. In the end, the order total could be $500 million, or it could be zero.

The Bottom Line

Besides its latest numbers, and the DoD news, C3.AI had another major announcement in December: its initiation of a share repurchase program. Over the next 18 months, it plans to buy back $100 million worth of its own stock.

This may be a sign the company believes shares are undervalued. Yet as it’s still a “show me” type of situation, I’m not going to agree with management’s assessment.

With scores of tech names, undeniably still “crushing it,” on sale after last month’s selloff, there’s little need to take a chance with AI stock.

AI stock earns an “F” rating in my Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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