Artificial intelligence is tearing up the business model that built Globant S.A. (NYSE:GLOB). The company’s stock price has dropped sharply to around $40 from $350 in 2021. Now Globant is attempting to reinvent itself. And it’s doing that by leaning more on AI. Its new Glob.AI platform is growing rapidly. But the transition is coming with slower revenue growth and restructuring costs.
Globant’s pivot to an AI-based model is about building a stronger, higher-margin business. But there’s a heavy price to pay for that, at least in the near-term, as the AI model cannibalizes the legacy model and costs rise.
We recently examined why Globant’s rapidly expanding AI business may still be too small to offset weakness in the model it is trying to replace. Read Here: Globant’s (GLOB) AI Pivot Masks A Slowing Legacy Business
Glob.AI Is Growing as Globant’s Legacy Business Slows
Globant S.A. generated $614.4 million in revenue in Q2, largely unchanged from a year ago. Perhaps the most attention-grabbing figure was Glob.AI’s annual recurring revenue. It increased 61% sequentially to $52.8 million. Globant expects Glob.AI’s ARR to exceed $110 million by the end of 2026.
The Glob.AI platform is designed to shift clients from paying for human hours toward paying for AI-powered delivery based on consumption or output. Globant says the AI model can generate gross margins roughly 10% points above the legacy hours-based delivery.
Globant’s AI model transition involves strategic partnerships. The company has sought to expand its AI capabilities by partnering with Anthropic, OpenAI, and other AI leaders. A recently announced agreement with TCI Entertainment is designed to place Globant’s capabilities in interactive commerce and gaming.
The Test Is Whether Globant Can Replace Legacy Model With Better Economics
Globant S.A.’s 2026 outlook brings the challenge into focus. The company cut its 2026 full-year revenue guidance to $2.428 billion to $2.462 billion, from a previous range of $2.462 billion to $2.508 billion. That highlights the challenge Globant faces as it scales its AI-native model while overall revenue growth remains under pressure.
For Globant to justify the change in business model, Glob.AI does not need merely to grow. It also needs to bring about better economics. Globant’s AI Pods, for instance, is designed to combine autonomous agents with human oversight. That changes the relationship between revenue and labor, and it should lead to better revenue per employee. Globant says its AI-native model is intended to decouple revenue growth from headcount growth. So far, the direction is encouraging, but investors still need evidence that those productivity gains can materially lift consolidated margins.
If AI Pods allow Globant to handle more work without increasing headcount, the company could expand margins even while the legacy business remains sluggish.
But the transition is already expensive. Globant incurred $32.3 million in restructuring costs in Q2. The restructuring was part of Globant’s broader effort to optimize its organization and align its cost base with its business-model transformation. Globant is bracing for more restructuring costs, including $20 million to $25 million in Q3.
If AI adoption proves slower than expected, Glob.AI could remain too small to offset the old model’s weakness. And a slow-growing AI business could keep profitability under more pressure.
Hedge Fund and Short Seller Positioning Shows Contrasting Signals
Globant S.A. closed Q2 with 23 hedge fund holders. That was down from 25 in Q1 and 33 in Q4. Yet the three largest funds increased their positions. Pzena Investment Management raised its stake 31% to about 3.9 million shares to remain as the top holder. Alyeska Investment Group raised its stake 79% to nearly 3 million shares, while AQR Capital Management bumped it up 51% to 1.2 million shares.
Still, Globant attracted more bearish bets. As of August 31, nearly 8 million Globant shares were sold short, with 5.6 days to cover. That represented 18.62% of the public float, marking a 3.3% jump in short interest from the previous reading.
The contrasting investor signals fit Globant’s AI turnaround situation, where some see a glass half full and others a glass half empty.
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