Shares of Monday.com (MNDY +3.15%) slipped 37.3% in 2025 and are down 70% from all-time highs, according to data from S&P Global Market Intelligence. A software provider that helps teams manage tasks, Monday.com has suffered along with other software stocks due to a narrative of disruption over artificial intelligence (AI). However, at the same time, the company's revenue continues to grow at an impressive double-digit rate.
Here's why Monday.com stock fell last year, and whether it is a buy for 2026.
NASDAQ: MNDY
Key Data Points
A narrative of AI disruption
Software stocks across the board suffered in 2025, mainly due to investor fears about AI. New AI tools, such as Claude Code, allow people to communicate with a chatbot to build software tools from scratch, even if they have minimal coding experience. The bear thesis for existing software providers is that companies will begin to build their own software with these AI tools, leading to a decrease in demand for third-party platforms such as Monday.com.
This is an interesting bear case, but it's not showing up in the numbers as of today. Last quarter, Monday.com's revenue grew 26% year-over-year, with a 37% growth in the total number of customers spending more than $50,000 annually on its software services. These are the companies supposedly building their own software products with AI that will replace Monday.com, but in reality, they are actually growing their spend with the company.
Monday.com is now profitable, generating positive free cash flow since 2023. Now, the company is expanding beyond task management for employees to marketing solutions, developer support, and IT support in hopes of expanding its addressable market.
Image source: Getty Images.
Time to buy Monday.com stock?
After its massive drawdown, Monday.com's stock now trades at a market cap of $6.9 billion. That is a price-to-free cash flow (P/FCF) of around 20 when compared to its trailing free cash flow of $343 million, a relatively low price for a company growing revenue at over 20% year-over-year.
Plus, today Monday.com is spending hundreds of millions of dollars a year on sales and marketing in order to win new customers. Once the business begins to mature, it will be able to expand its profit margins and grow its free cash flow at an even faster rate than revenue as marketing spend decreases. If you think the AI risk to software stocks is overblown, now could be a good time to scoop up some shares of Monday.com stock on the cheap.
