Figma shares rise after topping earnings expectations, though analysts warn that AI-related risks still linger. That was the clear takeaway after the design software company delivered stronger-than-expected fourth-quarter results, sending its stock sharply higher before momentum cooled.
On Thursday, shares of Figma closed up 7%, retreating from an even bigger surge the night before. In after-hours trading on Wednesday, the stock had jumped as much as 15% following the company’s earnings release and upbeat outlook.
Strong Revenue Growth Headlines the Quarter
Figma reported fourth-quarter revenue of $303.8 million, marking a 40% increase compared to the same period a year earlier. The top-line performance outpaced Wall Street forecasts and reinforced the company’s reputation as one of the fastest-growing players in the design and collaboration software space.
However, profitability told a different story. The company posted a net loss of $226.6 million, or 44 cents per share. That compares with net income of $33.1 million, or 15 cents per share, in the fourth quarter of 2024. The swing was notable, but investors appeared more focused on revenue growth and forward guidance than on the quarterly loss.
Looking ahead, Figma projected first-quarter revenue between $315 million and $317 million. That guidance suggests roughly 38% year-over-year growth and came in well above analyst expectations of $292 million, according to LSEG data.
Analysts Applaud Growth — With a Caveat
Analysts at Bank of America described the results as solid, highlighting the company’s forward guidance as the most important element of the report. In their view, Figma’s core growth drivers remain firmly intact, even as macroeconomic uncertainty creates potential headwinds.
Still, they cautioned that enthusiasm could be tempered by broader concerns surrounding artificial intelligence. While Figma’s AI roadmap appears to be progressing as planned, analysts noted that the stock may struggle to gain sustained momentum until the company clearly demonstrates how AI initiatives will translate into meaningful revenue.
AI Anxiety Weighs on the Software Sector
Investor anxiety about the disruptive potential of AI has rippled across the software industry in recent months. Many shareholders fear that generative AI tools could reshape or even replace traditional software offerings, triggering a broad sell-off.
The impact has been visible in sector-wide performance. The iShares Expanded Tech-Software Sector ETF has fallen more than 20% year to date, reflecting mounting caution among investors.
Figma has not been immune to that pressure. Like many technology firms, it has seen its valuation fluctuate as the market reassesses which companies stand to benefit from — or be threatened by — the AI wave.
Leaning Into AI Innovation
Rather than resist the shift, Figma has leaned into it. The company has been actively embedding AI capabilities into its product suite, aiming to enhance design workflows and team collaboration. Earlier this week, Figma announced a partnership with Anthropic, signaling its intent to align with key players in the AI ecosystem.
In an interview, CEO Dylan Field emphasized his long-term optimism about the software industry. He argued that software isn’t disappearing — in fact, he believes the world will need more of it than ever before. At the same time, he acknowledged that competition is intensifying as new AI-native tools enter the market.
Morgan Stanley: Positioned to Compete
Analysts at Morgan Stanley offered a nuanced assessment. They acknowledged that even Figma’s “best-in-class” growth rates have not shielded the stock from investor fears about generative AI disruption.
However, they argued that the company’s fourth-quarter performance demonstrates it is participating in the AI innovation cycle rather than falling victim to it. Rising usage of AI-powered features, expanding partnerships with AI-focused firms, and emerging monetization strategies all point to a company adapting to change.
In their view, the recent pullback in Figma’s shares may actually create a more attractive risk-reward setup for investors who believe in the company’s long-term positioning.
The Bigger Picture
Figma’s latest earnings report delivered a strong message: growth remains robust, and forward guidance is encouraging. Yet the broader narrative surrounding artificial intelligence continues to cast a shadow over the software sector.
For now, Figma shares rise after topping earnings expectations, though analysts warn that AI-related risks still linger — a reflection of both optimism about the company’s momentum and caution about the rapidly evolving tech landscape.
The coming quarters will likely hinge on one key question: can Figma turn its AI ambitions into measurable, recurring revenue? Investors appear willing to give the company the benefit of the doubt — but not without proof.
