Wix.com shares plunge 27% after Q1 earnings miss driven by AI investment costs

Wix.com Ltd shares fell 27.1% on Wednesday, 13 May, after the company reported a quarterly earnings miss for Q1 FY2026. Revenue of $541.2 million missed Wall Street expectations of $544 million, while adjusted earnings per share dropped 56.1% year-on-year to $0.68, significantly below the forecast of $1.24. Wix attributed the shortfall to heavy investments in its AI-driven Base44 platform and a 50% year-on-year increase in marketing expenditure, which totalled $167.8 million.

The company has been integrating artificial intelligence into its core offerings to counter competitive threats from AI-native tools. Base44, an app-building platform that runs on AI at its core, drew unusually strong demand during the quarter. To support these ambitions, Wix developed a proprietary large language model trained on internal data and real user feedback. Chief Executive Avishai Abrahami stated that the homegrown model is designed to sharpen the company’s competitive edge and reduce reliance on third-party providers, though this strategy carries significant infrastructure costs as compute bandwidth consumption rises with user demand.

Despite the earnings miss, Wix maintained its full-year FY2026 guidance, projecting mid-teens percentage growth for both bookings and revenue. Total annual recurring revenue reached $1.9 billion at the close of Q1 2026, up 15% year-on-year. Total bookings for the quarter landed at $585 million, also growing 15% year-on-year, with Creative Subscriptions bookings climbing 13% to $418.8 million and Business Solutions bookings adding $166.2 million, a 18% increase from the prior year’s period.

The stock has declined 72% over the past 52 weeks as investors price in the threat that AI-native tools pose to the company's traditional business model. Year-to-date, WIX stock has already fallen 48.86%, with the five most recent trading sessions accounting for a 33.87% blow driven largely by the disappointing quarterly results. The company, which has a market capitalisation of $3.23 billion, currently trades at 46.69 times forward adjusted earnings and 1.42 times sales.

Analysts currently project FY2026 earnings per share to fall 51.8% year-on-year to $1.63, though expectations for FY2027 suggest a bounce back with EPS growing 95.1% to $3.18. Wall Street’s collective verdict on WIX stock remains a Moderate Buy, with 14 of 23 analysts rating it a Strong Buy. The average price target of $117.55 implies a potential upside of 122.4%, while the high target of $180 suggests the stock could run as much as 240.6% from current levels.