DocuSign Says It’s an AI Winner. Why ChatGPT Isn’t a Threat to the Stock.

The immediate cause was the company’s first-quarter earnings beat and raised guidance. However, there were also signs of optimism around its AI-powered products.  

AI models such as ChatGPT might initially look like a threat to DocuSign’s business, if they are able to generate and modify contracts. However, the company is confident that clients will turn to DocuSign for specialized contract services. 

“If you look at DocuSign, we have deep experience built over multiple years of building agreement-specific models. This is not the same as drafting a high school essay,” Allan Thygesen, DocuSign’s CEO, told analysts on an earnings call on Thursday. 

DocuSign has a history in AI integration before the recent boom in interest in the technology. It acquired Seal Software, an AI analytics company, for $188 million in 2020. It also recently said it would use
Microsoft’s
(MSFT) OpenAI technology to provide summaries of agreements. 

“Generative AI can bring a new opportunity…by transforming the agreement workflow architecture with new products and enhancements powered by artificial intelligence,” Wedbush analyst Daniel Ives wrote in a research note on Friday.

Wedbush has a Neutral rating on the stock but raised its target price to $67 from $60.

Analysts at RBC Capital Markets wrote in a research note that generative AI could push more customers to use DocuSign’s ‘contract life cycle management’ products—software used to manage agreements over the longer term. 

RBC reiterated a Sector Perform rating and a $59 target price for DocuSign, noting it was too early to judge the potential success of its product innovation while the company faces macroeconomic headwinds.

Corrections & Amplifications:

Allan Thygesen is DocuSign’s CEO. An earlier version of this article said he was DocuSign’s head of investor relations.

Write to Adam Clark at [email protected]