Bull of the Day: Monday.com (MNDY)

Monday.com MNDY) is emerging as an attractive artificial intelligence (AI) software investment as the work management platform expands its AI-powered capabilities, accelerates enterprise adoption, and delivers impressive earnings growth.

Amid the recent tech selloff and growing concerns that AI could disrupt traditional software providers, Monday.com is beginning to challenge that narrative by demonstrating how AI can create new revenue opportunities rather than simply threaten existing business models.

With encouraging earnings estimate revisions and a reasonable valuation, MNDY currently sports a Zacks Rank #1 (Strong Buy), making it a compelling technology stock to consider as its Q3 results approach next month. 

How Monday.com Is Benefiting From AI

• Accelerating AI revenue: Most recently, annual recurring revenue (ARR) from AI products doubled sequentially during Q2, accounting for 17% of total net new ARR. This is particularly encouraging because it demonstrates that customers are willing to pay for Monday.com's AI capabilities.

• AI-powered automation: Monday.com launched its AI Work Platform in May, introducing autonomous AI agents that help businesses automate workflows, qualify sales leads, manage customer-service requests, and execute projects. These capabilities extend across its work management, CRM, and service offerings.

• Growing enterprise adoption: Customers generating more than $100,000 in ARR increased 37% year over year to 2,019 in Q2. Meanwhile, customers contributing more than $500,000 in ARR increased 68% to 114, highlighting opportunities to expand AI adoption among larger businesses.

• Improving profitability: Q2 revenue rose 22% year over year to $364.62 million, while non-GAAP operating income increased 35% to $61.1 million. Management also believes AI-assisted productivity can help the company expand margins without proportionately increasing headcount.

Monday.com's Core AI Products

Monday Vibe

An AI-powered application builder that lets users create custom business applications without traditional coding. It became Monday.com's fastest product to surpass $1 million in ARR.

Monday AI Agents

Autonomous agents designed to perform business tasks, coordinate workflows, and execute actions using organizational data, rather than simply providing AI-generated suggestions.

Attractive Growth Outlook & Rising EPS Revisions

Based on Zacks estimates, Monday.com's annual revenue is projected to grow 19% to $1.47 billion in FY26, then another 15% in FY27 to $1.69 billion.

More impressively, annual earnings are expected to climb 27% to $5.58 per share this year, with EPS projected to spike another 19% to $6.63 in FY27.

Supporting this outlook, the Zacks Consensus EPS estimate for FY26 has increased from $5.50 to $5.58 over the last 30 days, while FY27 estimates have edged higher from $6.59 to $6.63.

Monday.com's Stellar Execution

Further supporting Monday.com's attractive growth outlook is that the company has exceeded top-and bottom-line expectations in every quarter since it went public in 2021.

Over the last four quarters, MNDY has posted a very impressive average EPS surprise of 23.56% with an average sales surprise of 2.35%.

MNDY’s Reasonable Valuation

Despite its attractive growth outlook, at around $86 a share MNDY trades at 15X forward earnings, offering a noticeable discount to the Zacks Internet-Software industry's average of roughly 21X and the benchmark S&P 500's 22X.

MNDY also trades at a very reasonable price-to-forward-sales ratio of less than 3X, compared to the elevated P/S multiples many high-growth AI stocks command.

Bottom Line

Monday.com is emerging as a legitimate AI software beneficiary rather than simply a company incorporating AI into its existing products.

With AI monetization gaining momentum, double-digit revenue and earnings growth projected through FY27, and positive EPS revisions, MNDY is starting to offer investors an appealing combination of growth and value.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research