Key Points:
- Monday.com shares plummeted over 19% after issuing a weak revenue outlook.
- The company expects full-year revenue to miss Wall Street estimates by millions.
- Investors worry AI tools will replace traditional project management software.
- Despite the crash, the company beat earnings expectations for the fourth quarter.
Monday.com shares took a massive nosedive on Monday, dropping more than 19%. The project management platform issued a gloomy financial forecast, sparking fears that artificial intelligence is beginning to eat into its business.
The Israel-based company told investors to expect revenue between $338 million and $340 million for the current quarter. That figure falls short of the $343 million that analysts polled by FactSet had predicted. The outlook for the full year was also disappointing. The company expects to bring in about $1.46 billion, missing the $1.48 billion target set by Wall Street.
This drop is part of a larger trend. Software stocks have struggled heavily in the first few weeks of 2026. Investors are scared that new “AI agents” will automate the tasks these platforms handle, making the software obsolete. The iShares Expanded Tech-Software Sector ETF is already down 22% this year, and Monday.com has lost half its value since January.
During a call with analysts, the company’s leadership tried to defend its position. Co-CEO Eran Zinman stated that they do not see any direct negative impact from AI competitors yet. He emphasized that Monday.com is evolving its own product to include AI features, such as agents and new engagement tools. “We’re shifting our product, regardless, to be more AI native,” Zinman said.
To prove this, the company has changed its marketing. Zinman noted that their homepage and advertisements now focus heavily on artificial intelligence capabilities. However, management also warned that the market will remain “choppy” this year. They blamed foreign exchange rates for putting pressure on their profit margins.
The bad news about the future overshadowed a solid performance in the past. The company actually reported a strong fourth quarter. Earnings came in at $1.04 per share, beating the expected 92 cents. Revenue also grew 25% from a year ago to $333.9 million. Unfortunately, in this nervous market, traders care more about future threats than past success.
