Upwork shares plunge as AI Disruption fears trigger analyst downgrades

Investing.com -- Upwork shares have plunged on Friday after the company released its latest quarterly report, resulting in downgrades from Citizens and UBS analysts.

The freelance marketplace cut its full-year revenue outlook by roughly 8%, reigniting fears that artificial intelligence is structurally displacing demand on its platform.

First-quarter results were broadly in line, with revenue of $195.5 million meeting consensus and earnings per share of $0.35 beating estimates by $0.08.

However, second-quarter revenue guidance of $187-193 million fell sharply below the Street consensus of $204 million, implying negative year-on-year growth at the midpoint, and the full-year revenue outlook of $760-790 million came in well below the consensus of $842 million.

Citizens analyst Matthew Condon downgraded the stock to Market Perform, arguing that "AI-induced headwinds are likely to persist as model capabilities continue to advance and become capable of completing increasingly complex tasks."

While AI-related work on the platform is growing rapidly, surpassing $300 million in annualized gross services value, Condon said it "will take considerable time before AI-native tasks represent a meaningful majority of platform activity."

UBS analyst Joshua Chan cut his rating for UPWK to Neutral and slashed his price target to $10 from $20, citing the return to negative gross services value growth after a brief recovery in the second half of 2025.

"The return to negative GSV growth is likely to put AI disintermediation back at the forefront," Chan wrote. He now projects a 4% year-on-year GSV decline in 2026.

Analysts also acknowledged that cost restructuring, including the elimination of 24% of Upwork's workforce, and share buybacks provide some downside protection, but said these measures are insufficient to offset the revenue and AI narrative headwinds.

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