Monday.com drops 19% as AI disruption fears mount in software

The Israel-based company called for revenue between $338 million and $340 million in the current quarter, short of the $343 million expected by analysts polled by FactSet. For the full year, Monday.com forecasted between $1.452 billion and $1.462 billion in revenue, versus a FactSet estimate of $1.48 billion.

Software stocks have sold off in recent weeks on rising AI disruption fears and worries that new agentic tools can replace them.

So far this year, the iShares Expanded Tech-Software Sector ETF (IGV) has plummeted 22%, while shares of Monday.com have already lost half their value.

During an earnings call with analysts, management defended the company’s market position and highlighted new AI capabilities being implemented, such as agents and a vibe feature, to improve conversion and engagement.

He said the company has pivoted messaging around ads and on its homepage to become more AI focused.

However, management said it expects ongoing choppiness in the market this year due to near-term margin pressure from foreign exchange rates.

The software company reported fourth-quarter earnings of $1.04 per share, excluding items, beating the 92 cents per share LSEG expectation. Revenue grew 25% from a year ago to $333.9 million, above the $329.6 million expected by analysts.

Monday.com forecasted operating income of $165 million and $175 million for the year, versus a FactSet estimate of $220.2 million.