GoDaddy, the web-services company known for domain registration, got a downgrade from RBC Capital Markets on Monday. The investment bank says artificial intelligence tools are chipping away at GoDaddy's traditional advantage in the domain business, and the numbers back that up.
RBC estimates GoDaddy's share of new .com registrations has fallen to 17%-19%, down from the mid-20% range four years ago. Its overall .com market share slipped to about 31% in June, down from roughly 35% in 2022. The bank cut its rating on the stock to "sector perform" and set a price target of $95.
Why AI is a threat
GoDaddy has long used domains as the front door to its business. A customer buys a web address, then often adds hosting, site-building tools, and payment processing. That funnel has been a reliable revenue engine for the company.
But RBC argues that AI website builders and "agent" tools are changing the game. These tools let customers compare providers quickly and complete setup in fewer steps, weakening GoDaddy's edge at the starting line. Instead of starting with a domain and building from there, users can now generate a full site with AI and register the domain elsewhere—or even let the AI handle it.
GoDaddy has launched its own AI features, like Airo, and opened new developer tools. But RBC believes the competitive pressure is real and may limit how much the stock can rise.
What the numbers mean
The key data point is momentum, not size. A 17%-19% share of new .com registrations can matter more than a 31% overall share. Here's why: domains renew annually, and many businesses stick with the same web address once it's on marketing materials, emails, and customer logins. That creates a flywheel—win more registrations today, and you build a larger pool of renewals tomorrow.
If GoDaddy is losing ground in new registrations, it can quietly shrink the future base it gets to sell into, even if current revenue looks stable. And because its strategy depends on upselling domain buyers into higher-margin add-ons like hosting and payments, fewer "owned" domain relationships can mean slower recurring growth and softer customer economics.
That's why RBC framed AI as a medium-term cap on valuation, not a one-quarter demand wobble. The market seems to agree: the stock has been under pressure as investors weigh the long-term impact.
What it means for investors
For everyday investors, this is a reminder that even established companies can face disruption from new technology. GoDaddy is not a small player—it's a major name in web services—but its core domain business is being squeezed by AI tools that make it easier for customers to go elsewhere.
Investors should watch whether GoDaddy can offset the decline in domain share with growth in its other businesses, like hosting and payments. The company has been pushing into those areas, but the domain slowdown could weigh on its ability to convert new customers.
RBC's price target of $95 suggests the stock may have limited upside from current levels. That's a cautious signal, but not a catastrophic one. The downgrade is more about valuation than about GoDaddy's immediate financial health.
For context, this is part of a broader trend where AI is reshaping how people build and manage websites. As AI tools become more powerful, traditional web-services companies may need to adapt or risk losing market share. That's a theme worth watching across the tech sector.
In the meantime, GoDaddy investors should keep an eye on the company's next earnings report for signs of how the domain business is trending. If the decline in new registrations continues, it could put more pressure on the stock.
