Jim Cramer Surprised by Morgan Stanley's Report on GoDaddy Inc. (GDDY)

GoDaddy Inc. (GDDY) shares have lost 28% YTD, with a 14% drop in February and an 11% dip in August. Morgan Stanley included GDDY on its list of firms at risk from AI-led disruption, prompting Jim Cramer to express surprise. Despite this, Cramer previously acknowledged GDDY's potential as an investment but emphasized the importance of other AI stocks with higher returns and limited downside risk.

GoDaddy Inc. (GDDY) has experienced a significant drop in its share price this year, with a 28% year-to-date (YTD) loss, including a 14% drop in February and an 11% dip in August. This performance has raised concerns among investors, prompting Morgan Stanley to include GDDY on its list of firms at risk from AI-led disruption. Jim Cramer, a prominent financial personality, expressed surprise at the company's recent struggles, acknowledging its potential as an investment but emphasizing the importance of other AI stocks with higher returns and limited downside risk.

Despite these challenges, GDDY reported strong financial performance in its Q2 2025 earnings. The company reported an 8% revenue growth to $1.2 billion, driven by a 14% expansion in its Applications and Commerce (A&C) segment and strategic pricing and bundling initiatives [1]. Free cash flow rose by 21% to $392 million, supported by a 31% expansion in EBITDA margin and strong cash flow conversion.

One of the key drivers of GDDY's growth is its AI-powered solutions, particularly Airo. Airo has significantly boosted customer conversion rates and retention, while Agentic AI has reduced manual tasks, enhancing operational efficiency. However, the impact of macroeconomic conditions on customer sentiment, Agentic AI's vision, and Airo's impact on customer engagement and monetization remain key contradictions discussed during the company's latest earnings call [1].

Morgan Stanley's inclusion of GDDY on its list of firms at risk from AI-led disruption highlights the potential challenges the company faces. The report suggests that while GDDY's AI initiatives are promising, the broader market's shift towards more advanced AI technologies could pose a threat. Additionally, the company's recent struggles with share price performance indicate that investors are cautious about its ability to adapt to these changes.

In contrast, other AI stocks like Taiwan Semiconductor Manufacturing (TSMC), Upstart Holdings, and Meta Platforms have shown strong performance in 2025. TSMC, for instance, has seen rapid growth in its AI chip market, with a compound annual growth rate (CAGR) of 29% forecast through 2030. Upstart Holdings has also performed well, transforming the credit scoring market with its AI-driven model. Meta Platforms, on the other hand, is investing heavily in AI to maintain its leadership in the social media space [2, 3].

While GDDY's recent struggles are a cause for concern, its strong Q2 performance and AI initiatives suggest that it remains a company worth watching. However, investors should be mindful of the potential challenges posed by AI-led disruption and consider other AI stocks with higher returns and limited downside risk.

References:
[1] https://www.ainvest.com/news/godaddy-q2-2025-dissecting-contradictions-customer-sentiment-ai-vision-airo-growth-impact-2508/
[2] https://www.sharesmagazine.co.uk/news/shares/morgan-stanley-picks-top-three-cybersecurity-stocks-heading-into-earnings
[3] https://finance.yahoo.com/news/3-artificial-intelligence-ai-stocks-090000364.html