Wix stock has fallen sharply, down nearly 25% in May, as investors fret over AI-related costs and the possibility that AI could disrupt Wix's traditional website-building business.

The company announced a 20% workforce reduction and has been funding AI development, a combination that has weighed on profitability and heightened investor concern.

Revenue rose about 14% year over year in the latest quarter, driven in part by the Base44 no-code app builder, which contributes roughly $150 million in annual recurring revenue and signals some AI-fueled growth.

Over the past year Wix generated around $2 billion in revenue, but profitability remains pressured by AI-building costs, higher payroll, and earn-out bonuses tied to Base44, making the stock attractive only if the company can deliver meaningful profits amid AI disruption.

Wix is pursuing AI initiatives like Harmony, a chatbot-based tool to synthesize AI outputs, while acknowledging that AI investments are pushing up expenses and could curb spend from some professional customers.

There is investor concern that AI tools enabling site creation through chatbots could threaten Wix’s traditional templates and services, despite mixed data on this risk so far.

Earlier in the year, management carried out a significant stock buyback, reducing shares from about 55 million to roughly 42 million and supporting market capitalization around $2.38 billion as the stock tumbled.