GoDaddy GDDY shares have returned 51% over the trailing 12 months, outperforming the broader Zacks Computer & Technology sector’s appreciation of 7% and the Zacks Internet - Delivery Services industry’s rally of 37.1%.

GDDY shares have also outperformed its industry peers, including QuinStreet QNST, MakeMyTrip MMYT and Asure Software ASUR over the same time frame. QNST, MMYT and ASUR shares have returned 9.4%,48.5% and 24.3%, respectively, in the trailing 12 months.

The outperformance can be attributed to GoDaddy’s expanding AI-powered portfolio and strong performance in the Application and Commerce segment.

In the fourth quarter of 2024, Applications and Commerce, comprising websites, productivity applications, and payments and commerce, generated $441.2 million (37% of total revenues), up 16.9% on a year-over-year basis.

GDDY Outperforms Sector, Industry

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Is GoDaddy’s outperformance sustainable, given its reliance on AI-driven growth in the Application and Commerce segment? Let us find out.

GDDY Benefits From Expanding Portfolio

GoDaddy has made notable advancements in integrating AI-powered innovation into its portfolio. The company’s commitment to leveraging artificial intelligence is evident through the significant progress made with GoDaddy Airo, its AI-driven platform, which has gained remarkable traction and is poised to become a key contributor to growth.

In the fourth quarter of 2024, GoDaddy Airo gained significant traction, with 50% of paid subscriptions originating from Airo’s experience. This demonstrated that the platform is effectively driving customer acquisition and improving customer lifetime value.

The successful launch of Airo Plus, an upgraded version of Airo with advanced logos and AI-powered marketing tools, supported growth. By offering enhanced capabilities, GDDY positioned itself to provide even greater value to customers, ensuring that Airo remains a crucial driver of engagement and monetization.

The launch of GoDaddy Airo’s Super Bowl ad significantly boosted awareness, catalyzing the platform's visibility. The marketing campaign continued to build momentum into 2025, increasing customer interest and engagement, and ensuring that GoDaddy Airo remains a key player in the company’s growth trajectory.

In addition to these advancements, GDDY launched an improved Managed WordPress platform in the fourth quarter of 2024 with 2X faster performance and enhanced security, alongside the introduction of Airo Site Designer for WordPress, improving customer experience and conversion rates.

GoDaddy Issues Stable Q1 Guidance

GDDY’s expanding portfolio is poised to attract numerous small businesses, which will drive its top-line growth.

For the first quarter of 2025, the company expects revenues of $1.175-$1.195 billion, indicating year-over-year growth of 7% at the mid-point.

The company expects first-quarter A&C revenue growth in the mid-teens and Core revenue growth in the low-single digits.

Earnings Estimate Revisions Trend Upward for GDDY

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $1.19 billion, suggesting 7.21% growth over that reported in the year-ago quarter.

The consensus mark for earnings is pegged at $1.46 per share, which has been unchanged in the past 30 days.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

GoDaddy Trades at a Premium

The Value Score of D suggests a stretched valuation for GDDY at the moment, which makes it a risky bet for risk-averse investors.

GoDaddy’s stock is trading at a premium with a forward 12-month Price/Sales of 5.11X compared with the industry’s 1.84X.

Price/Sales F12M

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GDDY Faces Intense Competition & Macro Challenges

GoDaddy’s market share is threatened by intense competition across its Core Platform from Newfold Digital, Namecheap and Tucows, and its A&C services from Shopify, Block and BigCommerce, compounded by escalating pressure from tech giants like Wix, Squarespace, Google, Microsoft and Amazon, impacting GoDaddy’s growth.

With International operations contributing significantly to GDDY’s revenues, fluctuations in foreign exchange rates could negatively impact earnings. A strong U.S. dollar may reduce revenues when converted from other currencies.

Challenging macroeconomic issues, including high interest rates and inflation, do not bode well for GoDaddy’s prospects. Its clientele comprises primarily small and medium-scale businesses, which have been negatively impacted by the challenging macroeconomic conditions globally.

Conclusion: Hold GoDaddy Stock for Now

Despite GDDY’s growing portfolio, challenges persist, including macroeconomic uncertainties, increased competition in the digital services market and rising operational costs.

GoDaddy currently carries a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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