Among the challenges companies face as they incorporate AI into their business strategies is accurately projecting the impact the AI-based approach will have on their business and financial results. Business outcomes may fall short of expectations to the disappointment of investors, which in turn can lead to securities litigation. In the latest example of this phenomenon, investors sued the Israeli-based software company Monday.com after it adjusted its earnings guidance as its AI-based strategy unfolded differently than the company had projected. A copy of the March 10, 2026, complaint against the company can be found here.

Background

Monday is a software company whose products allow the company’s customers to develop work management applications. The complaint alleges that during the class period, the company portrayed its business as having a growth trajectory, projecting a 2027 revenue target of $1.8 billion. The company’s statements, the complaint alleges, projected “confidence in Monday’s ability to capitalize on its growth potential through AI product innovation and enterprise expansion.” The complaint alleges that during the class period, the company reiterated its “bold projection” regarding “enterprise customer growth, its multiproduct and AI-powered platform, and international expansion.”

On February 9, 2026, the company released its fourth quarter and full year 2025 results. Among other things, the company at that time announced  a weaker outlook for the Company’s 2026 guidance and a strategic shift away from its long-term 2027 revenue target of $1.8 billion. The company’s share price declined in response to this development.

The Lawsuit

On March 10, 2026, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against the company and certain of its investors. The complaint purports to be filed on behalf of investors who purchased the company’s securities between September 17, 2025, and February 6, 2026.

The complaint alleges that during the class period the defendants “created the false impression that they possessed reliable information pertaining to the Company’s long-term growth outlook through various AI investments and remained confident in its projection of $1.8 billion full year 2027 revenue target while also minimizing signs of slowing customer growth and lengthening enterprise sales cycles.” In truth, the complaint alleges, the company’s “portrayal of its AI investments as a durable growth driver to its long-term growth was uncertain thereby putting the 2027 revenue target at risk.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.

Discussion

The advent of AI presents significant opportunities for many companies. Unfortunately for many companies, the adoption of AI-based strategies includes a measure of unpredictability. In this case, the company found that the early success of its AI-based strategy did not, as the company had initially assumed, accurately project the company’s likely future results, as the AI strategy unfolded differently than the early results had suggested.

This case represents an example of one of the categories of AI-related cases that have arisen over the recent past. This case is an example of an “AI washing” type case, as it involves allegations that the company overstated its AI-related prospects or capabilities. It is important to note that while this case does involve AI-related allegations, therefore making this an AI-related case, the allegations in this case otherwise are unremarkable. There have long been cases filed in which companies’ share prices declined after the company withdrew or reduced its long-term financial guidance. In that respect, even though this case unquestionably is AI-related, it is otherwise something of a garden variety securities suit.

It is worth noting that what seems to have caused the problems for this company is that it was stating and re-confirming very long-term financial guidance – that is, it was providing a 2027 revenue projection in late 2025. There are a lot of ways a long-term projection like that can go wrong. It could be argued that this company got sued not because of its AI-based business strategy, but because it was putting out “way over the horizon” financial projections, a disclosure approach that can go wrong even without problems associated with the unpredictability of AI.

In any event, it is also worth noting that, according to my count, this case is the fifth AI-related securities suit to be filed this year. It seems increasingly likely that AI-related securities litigation will be a significant part of the overall volume of securities lawsuit filings in 2026