Ad News Live
Doximity AI Search: Shares of medical platform Doximity surged in overnight trading Friday.
The spike came after executives revealed strong profit margins tied to a new AI search tool.
CEO Jeffrey Tangney disclosed the figures during the company's first-quarter fiscal 2027 earnings call on Thursday.
He said the AI search product generates 10 times its operating cost in revenue. Tangney called the results early but promising.
He also noted that AI costs are likely to decline over time.
Improving model efficiency should drive that trend, he said. Tangney added that the unit economics behind the tool remain strong.
At one point, Doximity shares more than doubled in premarket trading.
Gains later cooled as the market officially opened. Shares still closed up 55% by the end of the session.
Analysts say the company's stock rally may not fully reflect its underlying strength. Doximity posted first-quarter revenue of $156.6 million.
Adjusted EBITDA came in at $74.8 million. Both figures beat Wall Street estimates.
The company also raised its full-year revenue guidance. The new range sits between $671 million and $681 million.
That marks a $6 million increase, or about 5%. Analysts believe the update does not yet account for the AI tool's full profit potential.
Piper Sandler analyst Jessica Tassan addressed the gap in a Friday client note. She said the fiscal 2027 guidance mainly reflects the first-quarter earnings beat.
According to Tassan, it does not capture significant gains from Doximity's expanding AI commercial pipeline.
She described management's approach to AI revenue forecasting as conservative.
Before Friday's rally, Doximity carried a market value of $3.7 billion.
The stock had been down 50% for the year heading into the earnings report.
Short Sellers Face Pressure Amid Rally
Tangney said the AI search tool is expanding more than just profit margins. He pointed to a larger addressable market as a key benefit.
He specifically cited unexpected growth potential within the health and pharmaceutical sectors.
Analysts expect margins to grow alongside that expanding market.
Michael Cherney of Leerink Partners echoed that view in a Thursday client note.
He said the AI search results reinforce confidence in Doximity's long-term margin outlook.
Cherney linked that confidence to the company's continued investment in AI technology.
The rally created challenges for investors betting against the stock.
Short sellers accounted for roughly 17% of shares available for trading heading into the earnings report, according to FactSet.
As those investors moved to cover their positions, the buying pressure likely added momentum to Friday's surge.
Visual Disclaimer: This is an AI-generated illustrative portrait. It is used for creative representation and does not depict a real-time event. Created by AD News Live.
Follow Us
