Monday.com Leads Software Sector Selloff as AI Disruption Fears Mount

Monday.com shares plunged 33% this week, mirroring steep declines across the software sector as investors grapple with AI's potential to reshape competitive dynamics. The project-management platform's drop erased significant market value alongside peers like SAP, Salesforce, and Adobe - all down 20-30% year-to-date.

Analysts observe eerie parallels to historic tech disruption cycles, where new technologies initially spark panic before industries adapt. While AI threatens to lower development costs and intensify competition, markets may be overestimating its near-term capacity to displace incumbents.

Monday.com's Q2 results revealed the strategic dilemma: revenue growth continues apace, but rising operating losses reflect heavy investment to stay competitive. Gartner's reduced outlook underscores broader sector pressures from tariffs, budget constraints, and now AI-driven uncertainty.