The Perfect Hedge Against AI Stocks?

Parkev Tatevosian, CFA•Sep 16, 2026

Summary

Parkev's main thesis is that Upwork, a gig economy platform, is navigating substantial disruption from artificial intelligence (AI), which has negatively impacted its revenue and stock performance. However, Parkev believes that despite these challenges, the stock's current valuation presents an attractive buying opportunity for value investors, though his personal conviction has decreased to its lowest level for a buy recommendation.

The market outlook for Upwork is mixed due to AI. While AI automation is shrinking demand for low-complexity tasks, a headwind for the company, this is partially offset by a 22% increase in explicit AI-related jobs and broader AI integration into project workflows. The macroeconomic slowdown in the labor market, combined with the proliferation of agentic AI, has caused Upwork's stock to sell off significantly.

**Upwork (UPWK):** Parkev notes that Upwork's stock is down 56% year-to-date in 2026, largely due to investors anticipating the negative impact of agentic AI before the company reported significant headwinds. Management has updated its full-year revenue outlook downward to $740 million and adjusted EBITDA to $230 million, lower than initial expectations. Parkev forecasts minimal free cash flow growth for Upwork between 2026 and 2031, from $220 million to $240 million, not even exceeding the rate of inflation, primarily due to the significant risk and threat from AI. He explicitly states that the business is losing revenue and customers, making it difficult to estimate the full extent of AI's impact.

However, Parkev emphasizes that Upwork will not lose 100% of its business to AI. He argues that workers on the platform can incorporate AI into their services, offering better value, and the platform provides a crucial convenience advantage for enterprises needing temporary workers and flexibility for gig workers. Furthermore, Upwork has shown a significant turnaround in operating profitability, moving from -15% in 2023 to a record 16.8% over the trailing 12-month period, driven by a strategic shift to focus on higher-value customers rather than mere customer acquisition volume. Parkev views the current valuation as highly attractive, with Upwork trading at a forward price-to-earnings ratio of 6.4, roughly one-quarter of the S&P 500 average, which he considers appropriate for a business facing such risks. His updated discounted cash flow valuation calculates a fair value of $14.64, against a current market price of $8.70, suggesting a substantial 68% upside. Despite his reduced conviction, Parkev still ranks it as a buying opportunity for value stock investors.

Mentioned Stocks

UPWK

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev states that Upwork is facing significant headwinds from AI-related automation, which is shrinking demand for low-complexity tasks, leading to lowered revenue guidance and a 56% year-to-date stock decline. He forecasts minimal free cash flow growth from 2026 to 2031, from $220 million to $240 million, due to AI risks. However, Parkev still views Upwork as a buying opportunity because it won't lose all business to AI, benefits from convenience and flexibility, and has improved operating profitability from -15% to 16.8%. The stock is trading at its cheapest valuation in years, with a forward P/E of 6.4. Parkev's discounted cash flow valuation suggests a fair value of $14.64 against a current market price of $8.70, indicating a 68% upside. Despite decreasing conviction, he still ranks it as a buy for value investors.

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