Freshworks Inc. (FRSH) experienced a significant pre-market plunge of 5.96% on Wednesday, following the company's disappointing annual profit outlook.

The primary driver for the sell-off was the software firm's forecast for its 2026 adjusted profit, which came in well below Wall Street estimates. The company projected earnings of 55 to 57 cents per share, significantly lower than the analyst consensus estimate of 69 cents per share. Management cited a higher tax rate and costs related to its acquisition of FireHydrant as factors contributing to the weaker profit guidance. This announcement has fanned wider investor concerns about the potential disruptive impact of artificial intelligence on the software industry.

In reaction to the forecast, several prominent analysts swiftly cut their price targets on the stock. UBS reduced its target to $11 from $17, Oppenheimer cut to $15 from $18, Wells Fargo lowered to $10 from $13, and Baird slashed its target to $10 from $16. The stock's decline extends a challenging year-to-date trend, having already plunged approximately 30.9% amid a broad selloff in software shares.