GoDaddy (GDDY): Evaluating Valuation After Major Airo.ai Upgrade and Evolving Software Sector Sentiment

GoDaddy, the US-based domain and web services provider, is stepping up its AI game with a major update to its Airo.ai platform. The company just rolled out six new AI agents designed to streamline website management and marketing for small businesses.

See our latest analysis for GoDaddy.

GoDaddy’s recent wave of product innovation with Airo.ai and its Agent Name Service comes at a pivotal moment for both the company and the broader software sector. While its latest share price of $126.4 reflects modest movement this week, momentum has faded, as shown by a year-to-date share price return of -36.45% and a one-year total shareholder return of -36.71%. However, GoDaddy’s longer-term trajectory remains compelling. The company boasts a 68.38% total return over three years and 55% across five years, reminding investors of its capacity to rebound when sentiment shifts and product upgrades take root.

If the surge in AI-powered tools got you thinking bigger, consider broadening your search to discover fast growing stocks with high insider ownership.

With analysts pricing the stock nearly 38% above current levels and strong long-term returns, the big question remains: is GoDaddy currently undervalued, or is the market already factoring in all of its future growth?

Most Popular Narrative: 27.8% Undervalued

Compared to GoDaddy's last close price, the most widely followed narrative places its fair value significantly higher, suggesting the market may be missing substantial upside. This creates a gap between present pricing and the bold assumptions underpinning analysts' fair value projections.

Large-scale adoption of subscription-based SaaS and bundling initiatives, enabled by accelerated AI-driven product development, is shifting revenue mix toward recurring and higher-margin streams, improving revenue predictability and EBITDA margin expansion (targeting 33% by 2026). Enhanced cross-sell and up-sell capabilities, especially through AI-powered seamless experiences, are compounding growth within GoDaddy's significant SMB base, which boosts ARPU and conversion rates and directly benefits free cash flow and profitability.

Read the complete narrative.

Want to uncover the premise behind this striking valuation? See how a projected shift in long-term profit margins and bold top-line targets drive the narrative’s calculated upside. Dive in for the specifics that have analysts convinced GoDaddy’s future is worth a much higher price.

Result: Fair Value of $175.06 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition from integrated platforms or if GoDaddy's new AI tools fail to gain traction could quickly undermine current growth expectations.

Find out about the key risks to this GoDaddy narrative.

Build Your Own GoDaddy Narrative

If you see GoDaddy's story differently or want to dive deeper on your own terms, you can craft a personalized perspective in just a few minutes, and Do it your way.

A great starting point for your GoDaddy research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Don’t limit your potential. The market is full of opportunities and our screeners make it easy to pinpoint high-potential stocks that match your goals. Shake up your watchlist and catch the next wave of outperformers before everyone else does.

• Lock in stable income by scanning these 14 dividend stocks with yields > 3%, which offer consistently strong yields above 3% and have proven dividend reliability.
• Seize tech momentum and stay ahead of the curve by exploring these 26 AI penny stocks, which are positioned to profit from the AI revolution.
• Secure stronger returns by targeting these 927 undervalued stocks based on cash flows, which still trade below what their cash flows justify.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com