Monday.com's (MNDY) SEO-driven website visits fell 23.5% in Q2 and 25% in July from a year earlier amid likely pressure from Alphabet's (GOOG/GOOGL) Google integrating AI Overviews into search results, BofA Securities said in a Thursday research report.

The fundamental challenges for the company and the AI search disruption raise concerns around growth and customer acquisition costs. If current web traffic trends persist, the company could face substantial self-serve pressures in H2 and 2026.

Self-serve gross annual recurring revenue, which grew about 29% in 2024, flipped negative to a 7% decline in Q2. BofA said if July traffic patterns hold, self-serve gross ARR added could fall again in 2026. The firm also estimated that Google/Search-driven gross ARR added could decline by 13%, or about $15 million, in 2026.

The brokerage noted that indirect website traffic, which it sees as the best proxy for new customer additions, declined 10% in Q2 but stabilized in July, suggesting some success in shifting marketing spend away from search. BofA also flagged risks heading into Monday.com's Sept. 17 analyst day, where long-term growth targets are expected.

Modifications to the company's BigBrain business intelligence marketing engine algorithms could yield better traffic results, according to the note.

The company indicated ongoing initiatives to improve performance, including revamping BigBrain algorithm as well as collaborating with external vendors to enhance content visibility to AI Overviews and optimize for AI-generated search results.

The brokerage downgraded the stock to neutral from buy and lowered its price objective to $205 per share from $240.

Shares of Monday.com were down 1.3% in recent Thursday trading.

Price: 171.04, Change: -2.33, Percent Change: -1.34