GoDaddy Inc. (NYSE:GDDY) beat consensus estimates on both revenue and earnings, but that wasn’t enough to prevent the stock from dropping 12%. The market’s reaction makes it clear that investors are paying more attention to the company’s future outlook than its recent results. This is not a story about an earnings miss. The real question is whether GoDaddy’s expansion into agentic AI products is a strategic move to reinforce its long-term business, or whether it reflects growing pressure from AI on its core business.
Bookings Deceleration Raised Red Flags
The company reported quarterly earnings of $1.83 per share, exceeding the consensus estimate by $0.14 while revenue rose 7% year over year to roughly $1.30 billion. Total bookings also increased 6% to $1.4 billion. However, Wells Fargo analyst Alec Brondolo highlighted that Applications and Commerce bookings growth slowed to 7% year over year from 9% in the previous quarter. He said the slowdown reflects growing consumer demand for agentic AI products.
In response, management is accelerating the launch of its Airo AI platform while reducing investment in legacy Applications and Commerce offerings. Analyst Alec Brondolo warned that this transition is likely to remain noisy throughout the second half of 2026 and into 2027. Reflecting those concerns, William Blair analyst Arjun Bhatia downgraded the stock from Outperform to Market Perform. Piper Sandler also maintained its Neutral rating, saying it still sees no clear catalyst for revenue growth to reaccelerate. The company also expects third-quarter revenue to range from $1.32 billion to $1.34 billion.
William Blair analyst Arjun Bhatia remarked:
Investors had already put GoDaddy in the high-risk basket of the AI disruption trade prior to earnings, and the performance this quarter is likely to further fuel fears and weigh on shares in the near term.
The Bull Case Hasn’t Disappeared
Despite concerns over slowing bookings growth, bulls argue that GoDaddy Inc. (NYSE:GDDY) continues to execute well on its AI strategy. Airo’s annualized bookings run rate surged 5x in a single quarter to $50 million, with CEO Amanpal Bhutani stating that adoption is exceeding expectations. The company also delivered stronger profitability. Its normalized EBITDA margin expanded by more than 200 basis points to 33%, while free cash flow reached $443 million. Shareholder returns remained another bright spot, as GoDaddy repurchased $852 million worth of shares year to date, lowering its share count by 7%.
