GoDaddy’s 1.42% Rally Lifts 441st-Ranked Stock on AI-Driven Guidance Hike and Earnings Surge

Market Snapshot

On November 3, 2025, GoDaddy (GDDY) traded with a volume of $0.30 billion, ranking 441st in trading activity among U.S. equities. The stock closed the day with a 1.42% increase, reflecting a modest rebound following months of underperformance. Over the preceding 90 days, the stock had declined 16%, and its year-to-date return stood at -33%. However, long-term holders have seen stronger gains, with total shareholder returns of 97% over three years and 78% over five years. The recent price action suggests renewed investor interest, though the stock remains significantly below analyst fair value estimates.

Key Drivers

GoDaddy’s third-quarter 2025 results and revised guidance provided a catalyst for its 5% intraday price surge. The company reported $1.27 billion in revenue, a 10% year-over-year increase, and net income of $210.5 million. Management raised full-year revenue guidance to $4.93–$4.95 billion, representing 8% growth at the midpoint—the top end of its three-year target range. This upward revision signaled confidence in the company’s ability to sustain momentum, particularly in its Applications and Commerce (A&C) segment, which grew 14% to $481 million. The A&C segment, driven by AI-powered tools like Airo and enhanced bundling strategies, is central to GoDaddy’s shift toward recurring revenue streams and higher-margin services.

The company’s strategic focus on AI-driven product development is reshaping its revenue model. CEO Amanpal Bhutani highlighted the transition from Generative AI to Agentic AI through the Airo platform, which automates customer journeys and enhances website creation. Internal efficiency gains, such as 45% of code now being AI-generated, underscore operational improvements. These innovations are expected to boost average revenue per user (ARPU), which rose 10% to $237 in Q3, and drive long-term margin expansion. By 2026, GoDaddy aims to achieve a 33% EBITDA margin, up from 32% in Q3 2025, as recurring revenue and higher-margin subscriptions gain traction.

Analysts and investors are pricing in a significant valuation gap. The most widely followed narrative estimates GoDaddy’s fair value at $187.75, a 41% premium to its closing price of $133.13. This premium reflects optimism about its recurring revenue model and AI-driven digital services but hinges on the company’s ability to meet ambitious growth targets. Free cash flow of $440 million in Q3, up 21% year-over-year, supports the valuation case, as does the $1.4 billion in share repurchases through September 2025. However, the stock’s current discount to intrinsic value estimates—nearly 50%—suggests lingering skepticism about the sustainability of its growth narrative.

Despite the positive momentum, risks persist. Competitive pressures from all-in-one cloud platforms and potential declines in small business demand could undermine GoDaddy’s expansion. Additionally, while AI adoption improves efficiency, rising token costs and gross margin pressures from product mix shifts remain concerns. Management acknowledged these challenges during the earnings call, emphasizing disciplined execution and customer retention strategies, including the $500-plus customer cohort, which now accounts for 10% of the base and drives near-perfect retention.

The revised guidance and AI-driven initiatives have reignited investor optimism, but the stock’s performance will ultimately depend on its ability to translate near-term momentum into durable long-term growth. With a $5.9 billion revenue target by 2028 and a path to 33% EBITDA margins, GoDaddy’s success hinges on maintaining its leadership in AI-powered SaaS and navigating competitive dynamics in the small business digital services market.