Monday.com was among the first major Israeli technology companies to recognize the enormous potential of artificial intelligence. It announced plans in February 2025 to integrate AI agents into human teams, before much of the corporate world had learned to speak fluently about agentic AI, and later reshaped its products for the emerging market.
The company has now made its most dramatic move yet, cutting about one-fifth of its workforce as part of what management describes as an all-in bet on the AI era. The layoffs themselves have already been reported. The more important question now is what they reveal about the pressure facing Monday.com and the wider software-as-a-service (SaaS) industry.
Investors appear unconvinced that optimistic product announcements alone will protect the company from the disruption caused by AI. Like participants in a ritual demanding their pound of flesh, they want immediate proof of discipline: fewer employees, lower costs, wider margins and more time for the company to demonstrate that its new strategy can generate growth.
The move is bad news for the technology sector, bad news for investors and worse news for the employees losing their jobs. Above all, it suggests that the market no longer believes reassuring statements about how established software companies will adapt to artificial intelligence without making painful changes.
Monday.com submitted a Form 6-K to the U.S. Securities and Exchange Commission detailing its organizational restructuring and cost reductions. At the same time, co-founders and co-CEOs Roy Mann and Eran Zinman sent a letter to employees in Israel and abroad.
Across those documents, the company repeated two central claims: The layoffs were not a conventional efficiency measure, and they were not intended to replace human employees with AI.
That distinction is difficult to sustain.
On Wall Street, the discussion centers on cost pressure, disappointing marketing performance and clear investor demands for stronger revenue growth and, above all, improved profitability. Monday.com raised its 2026 financial outlook alongside the layoffs, increasing its projected operating margin from 13% to 15%.
That alone strongly suggests an efficiency drive. Plans to reduce spending on extensive office space point in the same direction. So does the shift away from traditional SaaS pricing and toward a model increasingly tied to AI usage.
Monday.com may insist that it is not replacing employees with artificial intelligence, but the broader strategy is designed for a market in which AI tools allow companies to operate with fewer workers, automate tasks and reduce the number of software licenses they need.
Management describes the change in more dramatic terms.
“It has become clear that changing our strategy and product is not enough,” Mann and Zinman wrote. “The organization we built for our previous chapter is not the organization suited to the new AI era.”
“Without a fundamental change in how we operate, we will not be able to compete and win in this market,” they added.
“We are not making this change to protect what we have. We are making it to go all in on what Monday can become.”
The phrase “all in” is revealing. It comes from poker, where a player puts every remaining chip at risk. In Monday.com’s case, the employees appear to be part of the pot. The question is whether management is treating them as people central to the company’s future or as chips in its strategic wager.
The SaaS model under attack
Monday.com’s layoffs should be seen as part of the broader wave of job cuts that has swept technology companies in Israel and abroad over the past year.
In some cases, companies have been accused of “AI washing,” using artificial intelligence as a convenient explanation for ordinary cost-cutting or for replacing employees. Monday.com explicitly rejects that interpretation.
“This change is not about expecting fewer people to do the same amount of work,” the CEOs wrote. “The decision was not made to reduce costs or replace people with artificial intelligence.”
The closer comparison may be with companies forced to confront a fundamental shift in their business model, a disruption sometimes described as the SaaS crisis or “SaaSpocalypse.”
Under the traditional SaaS model, software companies charge customers an annual fee based largely on the number of users, or seats, within an organization. Artificial intelligence poses a direct strategic threat to that system.
Monday.com co-founders Eran Zinman and Roy Mann
(Photo: Shlomi Yosef)
AI tools can make teams more efficient and allow companies to operate with fewer employees. When a customer reduces its workforce, the software provider earns less under per-seat pricing.
In other cases, AI can replace parts of the software itself, or even the entire product. That could cut deeply into the revenue of companies whose platforms were built around recurring subscriptions and growing user numbers.
Monday.com is hardly alone. Salesforce, which helped pioneer the SaaS model, as well as Zendesk, Adobe and Intuit, have all faced pressure as investors reassess the future of software companies in the AI era. Israeli-linked companies including Wix, ZoomInfo and Amdocs have confronted similar concerns.
Monday.com’s own shares have lost about half their value since the beginning of the year. Competitors such as Asana and Smartsheet have also faced intense investor pressure.
The broader picture is clear: The market is worried about the future of SaaS companies and the potentially devastating effect AI could have on their business models.
Monday.com can continue to report profits and issue respectable forecasts, but investors are hesitating and, in some cases, leaving. The company said it is building a “leaner and more focused” operating model and investing in an “AI-driven growth strategy.”
Whether those phrases will reassure the market remains uncertain.
The company’s shares fell more than 4% on Wall Street following the announcement. The real long-term test will not be the immediate reaction to the layoffs, but whether Monday.com can restore meaningful revenue growth through its new AI platform.
Layoffs buy time, not relevance
The experience of other technology companies offers little reassurance.
Layoffs and efficiency programs have not, in most cases, produced dramatic recoveries. Wall Street often responds positively to cost-cutting in the short term, but investors later punish companies when the dismissals reveal slowing growth, strategic confusion or a loss of technological relevance.
Wix shares, for example, have lost about 50% of their value since the beginning of 2026, reducing the company’s market capitalization to approximately $2 billion.
Intuit shares have fallen about 25% over the past three months and are trading near $290, far below their record high of $798 in the summer of 2025.
Amdocs has dropped 35.5% since the start of 2026 and reached a six-year low.
Monday.com’s cuts may improve margins, lower expenses and give management more time to rebuild the business. They may even satisfy investors temporarily by delivering the pound of flesh they demanded.
But layoffs alone are not a cure. They do not resolve the threat to per-seat pricing, prove that new AI products will generate substantial revenue or establish that Monday.com can remain essential when customers can automate more work with fewer people.
The company’s future will therefore not be determined by how aggressively it cuts, but by whether it can show that its products, pricing and operating model still have a durable place in an AI-dominated market.
The layoffs have bought Monday.com time. They have not yet provided an answer.