Upwork Stock Down 18% YTD: Is This a Buying Opportunity?

The way we work is changing fast. Thanks to the rise of the gig economy, more people are choosing freelance work for its flexibility, freedom, and control over their time and workspace. This shift is fueling rapid growth in platforms that connect businesses with independent professionals.

According to a recent report by ResearchAndMarkets.com, the global freelance platforms market is projected to more than double from $7.65 billion in 2025 to $16.54 billion by 2030, at a strong CAGR of 16.66%. Businesses are increasingly relying on flexible, on-demand talent in a world where specialized skills and agility are more valuable than ever.

Upwork Inc. UPWK stands out as one of the leaders in this space. Its global online marketplace helps companies find and work with freelance talent across a wide range of services. With artificial intelligence (AI)-powered tools that boost client engagement and productivity, and solid first-quarter 2025 results, the company seems well-positioned. Yet, the stock is down 18% year to date. So, is the market overlooking Upwork’s long-term potential? And should you buy the dip in the stock? Let’s break this down.

UPWK’s Record Q1 Results

Upwork kicked off 2025 on a strong note, delivering record first-quarter results that exceeded expectations. Revenues came in at $193 million, topping both the company’s guidance range and Wall Street estimates. Earnings also exceeded expectations as cost-control efforts paid off. Upwork reported a record-high adjusted EBITDA of $56 million and a healthy margin of 29%. Net income reached $37.7 million—another quarterly best for the company.

Upwork Inc. Price, Consensus and EPS Surprise

Upwork Inc. price-consensus-eps-surprise-chart | Upwork Inc. Quote

Key business metrics also showed improvement. Gross services volume (GSV) per active client rose year over year for the first time in six quarters and climbed for the third straight quarter. Product enhancements, including better search recommendations and customer experience updates, helped drive marketplace outperformance.

The company remains committed to returning value to shareholders. In the first quarter of 2025, it repurchased $2.3 million worth of shares. As of quarter-end, $67 million remained under its existing share repurchase authorization.

Upwork guided second-quarter revenues between $184 million and $189 million and expects adjusted EBITDA of $45-$49 million, with margins likely to normalize from first-quarter highs. For the full year, the company reaffirmed its revenue target of $740-$760 million but raised its adjusted EBITDA guidance to $190-$200 million and EPS forecast to $1.14-$1.18.

The Zacks Consensus Estimate for UPWK’s 2025 and 2026 EPS implies year-over-year growth of 9.6% and 16.6%, respectively. Here’s how the estimates have been revised in the past 90 days.

Upwork’s Bold Push Into AI Is a Key Catalyst

Upwork isn’t just riding the wave of the freelance economy—it’s actively reshaping it with AI. The company’s CEO, Hayden Brown, said on the last earnings call, “We are incredibly excited by the early impact of our strategic product investments in AI, which are already enhancing customer productivity and engagement. With positive momentum across our business and a winning strategy for AI innovation, we are confident in our path to expand market share, drive ongoing profitability, and continue to be the category leader at the intersection of talent, technology and work.”

The company has made a clear pivot to becoming an AI-native platform, and at the heart of that shift is Uma, its in-house “Mindful AI.” Uma is designed to simplify the user experience by handling time-consuming tasks like writing proposals and screening candidates. And it’s already making an impact. In the last reported quarter, engagement with Uma surged 52% quarter over quarter, while proposal writing features saw a 58% jump. These tools are helping improve hiring rates, client conversions and freelancer earnings.

Upwork is pushing this advantage further with both homegrown innovations and strategic acquisitions. The buyout of Headroom has accelerated UPWK’s AI roadmap. The acquisition of Objective AI expanded its capabilities into image, video and audio, while also strengthening its AI matching tools.

Upwork’s investment in AI isn’t just improving the user experience—it’s also opening new doors for growth. As more companies scramble to adopt AI, a major bottleneck is talent. Around 63% of employers cite a shortage of AI skills as a barrier to progress. That’s where Upwork shines. With access to over 80,000 AI specialists, the platform has become a go-to resource for enterprises in need of skilled talent.

Real-world use cases back this up. Upwork freelancers are helping global social media firms fine-tune large language model training data, assisting pharmaceutical companies in developing low-code AI healthcare tools, and enabling law firms to create custom GPTs for organizing vast legal files.  For investors, Upwork’s growing role in the AI transformation is compelling.

Of course, Upwork isn’t the only platform chasing this AI advantage. Companies like Fiverr International FVRR and Microsoft MSFT continue integrating AI across their platforms. Fiverris ramping up its AI capabilities, with tools like Fiverr Neo, while Microsoft is embedding generative AI across LinkedIn, from smarter job matching to AI-enhanced profile building. Both Fiverr and Microsoft are sharpening their edge, pushing Upwork to innovate faster and stay ahead.

We Are Bullish on UPWK Stock

Despite its stock price decline year to date, Upwork’s strong execution, accelerating AI integration and improving profitability signal long-term potential. In fact, this dip could present a compelling entry point for long-term investors.

The company’s strategic pivot toward AI integration is driving both customer engagement and profitability. With upward earnings estimate revisions, strong outlook and lower valuation than the industry, UPWK offers an intriguing setup for growth-oriented investors. The company currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Zacks Investment Research