AI’s Risky Bet on Volatility Fails: 80% Plunge Reveals Market’s Heavy Dependence

Alpha Arena, a company specializing in fintech analytics, has recently published a surprising discovery: Western AI-based trading systems suffered losses of nearly 80% of their funds in just one week. This dramatic downturn highlights major weaknesses in algorithmic trading approaches during turbulent market periods, as detailed in

. This incident has reignited debate over the reliability of AI in financial markets, especially as companies such as BigBear.ai (BBAI) and C3.ai (AI) confront their own industry hurdles.

BigBear.ai, which delivers AI-driven solutions for sectors like national security and infrastructure, has encountered significant obstacles this year. Budget reductions, particularly those stemming from Trump-era fiscal measures, reduced the company’s Q2 revenue to $32.5 million—an 18% drop compared to the same period last year, according to

. The company also lowered its 2025 revenue projection to between $125 and $140 million, a notable decrease from the $158.2 million forecast for 2024. Despite these difficulties, BigBear.ai formed a collaboration with defense technology company Tsecond to boost its edge computing for military use. However, this partnership has not alleviated broader worries about the company’s financial health, as it reported a $90.3 million operating loss in Q2, largely due to a goodwill impairment.

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Meanwhile, C3.ai has struggled with executive turnover and legal issues. CEO Tom Siebel resigned in 2025 for health-related reasons, creating a leadership gap that negatively affected sales performance. The company’s revenue fell to $70.3 million in the first quarter of fiscal 2026, down from $87.2 million a year earlier. C3.ai is also facing a class-action lawsuit accusing its leadership of misleading investors by minimizing the CEO’s health problems and their operational impact. The company’s stock price has dropped by almost half in 2025, though its forward price-to-sales ratio of 7.93 now appears low compared to BigBear.ai’s 19.17, based on

. Some analysts believe C3.ai’s broad customer portfolio, including partnerships with Microsoft, could provide more stability in the long run.

On the other hand, UiPath (PATH) has successfully used AI to enhance its automation platform, posting a 14% year-over-year increase in revenue to $362 million in its most recent quarter. The company’s adoption of generative AI in robotic process automation has resulted in a 108% dollar-based net retention rate, surpassing competitors like Palantir and C3.ai. UiPath’s share price has climbed 22% in the past month, and its forward P/E ratio stands at 21.42—significantly below the sector average of 37.83.

The recent instability in the AI industry has also brought attention to the risks of excessive dependence on algorithmic trading. Although quantum computing was once expected to revolutionize the field, it is still in early development, with major players like Microsoft and Google racing to adopt it. For now, Alpha Arena’s research reflects investors’ caution regarding the unpredictable nature of AI.