LegalZoom Surges 30% After BofA Upgrade to Buy

LegalZoom.com shares rose over 30% premarket after BofA upgraded the company to Buy from Underperform. BofA cited management's shift towards subscriptions and strategic AI collaborations, including partnerships with Perplexity and OpenAI, which can create a new revenue stream for the company. The upgrade is a positive sign for LegalZoom.com's future prospects.

LegalZoom.com, Inc. (NASDAQ: LZ) saw its shares rise by over 30% premarket on July 2, 2025, following a significant upgrade by Bank of America (BofA) to a "Buy" rating from "Underperform." The upgrade was largely driven by BofA's positive outlook on LegalZoom's strategic shift towards subscriptions and its strategic AI collaborations, including partnerships with Perplexity and OpenAI [1].

The recent collaboration between LegalZoom and OpenAI has been particularly impactful. The integration of LegalZoom's legal resources into OpenAI's ChatGPT platform is expected to provide users with customized legal advice and document drafting capabilities, making the process of obtaining legal services more accessible and efficient [1]. This move aligns with LegalZoom's aim to supplement its legal staff with AI, rather than replacing human professionals [1].

BofA analysts believe that these AI partnerships have the potential to create a new revenue stream for LegalZoom. The ability to offer tailored solutions and comprehensive analysis through advanced AI capabilities is likely to attract both technology enthusiasts and small business owners seeking rapid and easy legal solutions [1]. The integration of LegalZoom's resources into ChatGPT could also set a precedent for other industries, promoting innovation and customer choice [1].

In addition to the OpenAI partnership, LegalZoom has also formed a strategic collaboration with Perplexity, further enhancing its AI capabilities and positioning the company as a leader in leveraging technology to improve legal services [1]. These partnerships are part of LegalZoom's broader strategy to make legal services more accessible and straightforward to operate, potentially influencing the market in the future [1].

The upgrade from BofA is a positive sign for LegalZoom.com's future prospects, indicating investor confidence in the company's ability to leverage technology and strategic partnerships to drive growth and innovation. As the legal services industry continues to evolve, LegalZoom's focus on AI and subscription models is likely to be a key factor in its success.

References:
[1] https://www.techi.com/two-takes/legalzoom-stock-surges-openai-chatgpt-partnership/