Monday.com slashes 20% of staff as software sector faces AI reckoning

Monday.com is cutting roughly 620 jobs, or 20 percent of its global workforce, as the Israeli project management company attempts to restructure around an "AI Work Platform." The company disclosed the plan in a US regulatory filing on Tuesday, citing the need for a leaner operating model. Co-founder and co-CEO Eran Zinman called it "the most painful decision the company has made since its founding."

The layoffs highlight a severe divergence between operational performance and market valuation for legacy software makers. Monday.com reported first-quarter revenue of $351 million, up 24 percent year on year, yet its stock has lost more than half its value in 2026. Its market capitalisation has plummeted to roughly $3 billion, down about 75 percent from its 52-week high.

Investors are fleeing the sector over fears that AI agents and automated coding tools will render conventional software-as-a-service products obsolete. This market selloff is forcing established companies to prove they are evolving before their valuations collapse entirely. Revenue growth is no longer enough to satisfy a market that doubts the long-term survival of traditional workflow software.

Monday.com is not alone in this pivot. Atlassian cut 1,600 jobs and replaced its chief technology officer in March, while fellow Israeli firm Wix slashed 20 percent of its staff in May. Across the industry, companies are posting strong revenues while simultaneously cutting headcount and redirecting savings toward AI development.

Zinman insisted the layoffs are "not made to reduce costs or replace people with AI," framing them instead as an offensive play to go "all in on what it can become." The restructuring will create a flatter organisation with fewer management layers and more autonomous teams. Monday.com expects to incur $45 million to $55 million in charges, mostly for severance and office space, though it plans to keep hiring in strategic areas.

Whether investors accept this narrative remains an open question. In an environment where AI is simultaneously the rationale for job cuts and the product being sold, the tech industry is increasingly at risk of what OpenAI CEO Sam Altman has called "AI washing." That is the practice of citing artificial intelligence to justify decisions driven by other pressures entirely.