Monday.com stock drops 21% on weak guidance

Monday.com’s stock dropped 21% on February 9 after issuing weaker guidance amid concerns about AI’s impact on the software industry.

The Israel-based project management platform forecasted quarterly revenue of US$338 million to US$340 million, below analysts’ expectations of US$343 million, and full-year revenue of US$1.5 billion, short of the US$1.5 billion estimate.

Software stocks have declined recently due to fears that AI tools could replace existing business models, with the iShares Expanded Tech-Software Sector ETF falling 22% this year.

Monday.com reported Q4 earnings of US$1.04 per share, excluding items, beating estimates, with revenue up 25% year-on-year to US$333.9 million.

The company’s management said it currently sees no impact from AI competitors but is shifting its messaging to emphasize AI features.

It also forecasted operating income of US$165 million to US$175 million for 2026, below analyst estimates of US$220.2 million.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

### Monday.coms guidance links to self-serve headwinds and an AI rebuild

The companys cautious forecast ties to its self-serve (“no-touch”) segment, where management cited persistently higher customer acquisition costs, weaker returns, and no expected improvement through 2026 1.
Smaller customers are under pressure, while growth is moving upmarket. Customers with more than $50,000 in annual recurring revenue represent 41% of total ARR (annual recurring revenue, not total revenue) 1.
Monday.com says it rearchitected its core platform around AI agents, which are software systems that can autonomously complete tasks. The goal includes helping teams do the work, along with managing it 1.
Management expects tradeoffs from this approach, with 2026 gross margin in the mid-to-high 80s versus 90% in 2025. It linked the change to higher AI investment and other factors 1.

### Investors question per-seat SaaS economics as AI agents automate work

Monday.coms stock drop aligns with worries that AI agents will automate workflows, reduce the need for traditional software interfaces, and pressure per-seat pricing used by many SaaS (software-as-a-service) companies 2.
Some firms are rolling out hybrid pricing that pairs seat licenses with usage-based AI credits. One playbook names monday.com as an example of this structure 3.
This shift raises the bar for software platforms, which need to connect AI to added revenue through higher contract values or new monetization, rather than seat reduction 2.
The market reaction signals that adding AI features alone may not calm investors. Attention stays on whether the business model holds as more work becomes automated 2.