GoDaddy shares slide 12% as investors question AI pivot despite earnings beat
GoDaddy reported strong profitability and rapid adoption of its Airo AI platform, but Wall Street focused on decelerating bookings in core segments and uncertainty around the timeline for agentic AI revenue.
GoDaddy Inc. shares fell 12% on Friday following the release of quarterly results that exceeded consensus estimates for revenue and earnings. The sharp decline underscores a market shift in focus, with investors prioritising the company’s strategic transition towards agentic AI products over its recent financial outperformance. Despite beating expectations, the stock’s reaction highlights growing scepticism regarding the timeline and clarity of revenue catalysts associated with the new technology push.
The company reported quarterly earnings of $1.83 per share, surpassing the consensus estimate by $0.14. Revenue rose 7% year-on-year to approximately $1.30 billion, while total bookings increased 6% to $1.4 billion. However, underlying growth in the core Applications and Commerce segments slowed, with bookings growth decelerating to 7% from 9% in the previous quarter. This deceleration has raised concerns that consumer demand is shifting towards agentic AI solutions, potentially impacting legacy product lines.
In response to the changing landscape, GoDaddy is accelerating the launch of its Airo AI platform while reducing investment in older offerings. The new platform has seen rapid uptake, with annualised bookings run rates surging fivefold in a single quarter to $50 million. CEO Amanpal Bhutani stated that adoption rates are exceeding internal expectations, suggesting that the AI pivot is gaining traction among users.
Despite the strong profitability metrics, including a normalized EBITDA margin expansion of more than 200 basis points to 33% and $443 million in free cash flow, analysts remain cautious. William Blair analyst Arjun Bhatia downgraded the stock from Outperform to Market Perform, noting that investors had already categorised the company as a high-risk AI disruption trade. Bhatian remarked that the quarter’s performance is likely to fuel near-term fears and weigh on the share price.
Wells Fargo analyst Alec Brondolo warned that the transition to agentic AI will likely remain noisy through the second half of 2026 and into 2027. Piper Sandler maintained a Neutral rating, citing a lack of clear revenue catalysts to reaccelerate growth. Meanwhile, hedge fund interest has waned, with holdings dropping from 57 funds to 45 as of the March quarter close, and total holdings falling from $1.98 billion to $1.26 billion. Short interest currently stands at 6.68%, reflecting moderate bearish sentiment.
GoDaddy repurchased $852 million worth of shares year-to-date, reducing its share count by 7%, and provided third-quarter revenue guidance between $1.32 billion and $1.34 billion. While the company continues to execute well on shareholder returns and AI integration, the market’s rejection of the stock suggests that confidence in the strategic pivot remains fragile until the transition period stabilises.
