Software stocks have been on a roller-coaster ride over the last few months, as fears of disruption from generative artificial intelligence (AI) have caused investors to reevaluate the future of many businesses in the sector. The predictable subscription revenue model of software-as-a-service (SaaS) stocks might not be so predictable anymore, increasing uncertainty and pushing earnings multiples for many companies much lower.
One company that appears particularly threatened by the rise of AI coding agents like Anthropic's Claude Code saw its stock price drop nearly 75% from its 2025 peak by late February. While the shares have since rebounded sharply (up 50% since their February lows as of this writing), thanks in part to a solid earnings report, analysts still see potential for the stock to climb another 33%.
Here's why investors should take a closer look at Wix (WIX +1.40%), which trades for about $94 as of this writing with a median analyst price target of $125.
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If you can't beat 'em, join 'em
Wix's core business is helping people build websites. But when anyone can type a description of a website they want to "build" into Anthropic's Claude Code and have a working webpage in a few minutes, it seems like it might not be long for this world.
Wix is more than just a website builder, though. It also provides hosting and maintenance services for its users, and it offers add-ons like marketing services to monetize sites, payment services for storefronts, and more. It has found a particular niche with freelancers and studios, which provide a stickier customer base and are more likely to use site-building tools where they have more control over the final product compared to an AI-generated website.
But management isn't just standing still as AI encroaches on its business. Last summer, it acquired Base44 for $80 million. It's invested heavily in marketing the vibe-coding platform, and management says it recently reached $100 million in annual recurring revenue.
The company also introduced Wix Harmony earlier this year, which is a platform that integrates AI-generated website building with the manual controls needed to make it just right. Management says early results are better than expected, with high conversion rates and monetization.
NASDAQ: WIX
Key Data Points
While Wix is investing heavily in artificial intelligence, it's maintaining cost discipline. That led it to outperform expectations on its bottom line in the fourth quarter, with earnings per share of $1.81 versus the $1.36 analysts expected. It could see strong earnings growth this year as it scales Base44 and improves conversion rates on free users. The company can also bolster its earnings per share as it plans to execute $2 billion in share repurchases this year, significantly reducing its outstanding shares.
Cantor Fitzgerald analysts reiterated their $130 price target following Wix's fourth-quarter earnings release. They cited the strength of Base44, which is running well ahead of their original estimate made following Wix's acquisition. Many analysts, however, cut their targets following the release, adjusting for the massive drop in price the stock has seen and the increased uncertainty stemming from AI competitors.
If Wix turns in another stellar earnings report over the next couple quarters, showing growth in its AI products and improved levels of monetization, it might not be long until those same analysts are reversing course and adjusting their price targets higher. At least for now, there's no analyst who thinks Wix is heading lower. The lowest price target among analysts is $100 per share.
