Doximity shares double. Here’s what’s driving it 

Shares of medical platform Doximity more than doubled at one point in overnight trading Friday after some bold comments on the margin for its new AI search tool.

CEO Jeffrey Tangney said the product brings in 10 times what it costs to run.

“It’s early days on our AI search product, but I can tell you we’re earning more than 10 times per search in revenue than it costs,” he said on Thursday during the company’s first-quarter fiscal 2027 earnings call.

“Over time, we probably expect the overall AI cost, if anything, [to] go down as models get more efficient, so we feel good about the unit economics there,” Tangney added.

Doximity shares were up more than 130% in premarket trading before settling down a bit as the market opened officially. The shares were last up 59%.

Analysts think these spectacular returns are not yet baked into the company’s already solid financials. Doximity reported first-quarter revenues of $156.6 million and adjusted EBITDA of $74.8 million, both of which were above consensus estimates.

The company also raised its full year revenue guidance range up by $6 million, or 5%, to between $671 million and $681 million — but the huge AI profitability potential is likely not a part of that boosted forecast, analysts said.

“The FY27 raise (which is mostly comprised of the F1Q27 beat) does not reflect a significant contribution from the expanding AI commercial pipeline described on the earning call and in callbacks,” Jessica Tassan at Piper Sandler wrote to clients in a Friday note.

Tassan said she thought that management is taking a “conservative approach” to AI search revenue in its FY27 outlook.

Shares of Doximity, which sported a market value of $3.7 billion before Friday’s surge, were down 50% for the year before the results.

CEO Tangney suggested that the AI search is resulting in not only higher profitability but also a larger addressable market. 

“Frankly, the [total addressable market] that this unlocks for us within health, within pharma has been a real surprise and upside for us,” he said.

Longer-term margins could swell along with the increasing market size.

“[AI search is] reinforcing confidence that [Doximity’s] elevated AI investments will ultimately support attractive long-term margins,” Michael Cherney at Leerink Partnerships wrote to clients on Thursday.

While great news for Doximity, the huge upswing the in the stock on Friday morning is bad for anybody who is shorting it.

About 17% of shares available for trading were sold short heading into the earnings results, according to FactSet. As those short sellers are forced to unwind those positions, it likely added fuel to Doximity’s surge.