Doximity's stock (DOCS) went vertical before the open on Friday, Aug. 7, 2026. In overnight trading, shares briefly more than doubled, crossing the 100% gain mark before settling back.
The stock climbed more than 130% before the open and was last 35% higher.
The trigger was CEO Jeffrey Tangney explaining why the company's AI search is profitable. On the first-quarter fiscal 2027 earnings call, he said each AI search generates more than 10 times its cost in revenue.
"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.
There was a mechanical push behind the move as well. About 17% of Doximity's available shares were sold short before the results, according to FactSet.
Short sellers borrow shares and sell them, hoping to buy them back cheaper. When the stock jumps instead, many rush to cover those bets, and that forced short covering likely boosted the rally.
Doximity's market value was $3.7 billion before Friday, and the stock was down 50% for the year before earnings. A stock with that much bad news already priced in can move fast when the news turns better.
That beaten-down backdrop matters. The AI search product is still early, but Tangney said it has opened a larger market in health and pharma than the company expected, so the call gave investors a fresh reason to recalibrate.
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Doximity posted $156.6 million in revenue for the first quarter. It also reported $74.8 million in adjusted EBITDA, a profit measure that strips out interest, taxes, depreciation, and amortization. Both figures came in above analyst consensus.
Tangney added that AI costs may fall as models become more efficient. "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," he said. Unit economics is the profit math on a single search, and the math looks stronger if costs drop.
He also said AI search opened more total addressable market than expected in health and pharma.
"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.
Doximity raised its full-year revenue forecast by $6 million, or about 5%, to a range of $671 million to $681 million. That sounds like a confident outlook.
Piper Sandler's Jessica Tassan said the FY27 guidance was cautious on AI search revenue and takes a "conservative approach" to the opportunity. She wrote that the raise mostly reflects the first-quarter beat, not a significant contribution from the AI commercial pipeline the company described on the call.
Leerink's Michael Cherney wrote that Doximity's AI investments should support attractive long-term margins. Wall Street is clearly split on how much of Friday's jump is about AI and how much is about market mechanics.
Doximity is not yet putting AI search revenue into its official forecast in a big way. That leaves room for the story to grow, or for the stock to fade if the revenue does not show up.
The bottom line: Friday's move was part real business news and part short squeeze. For your portfolio, the number to watch is not the stock's price at any given moment.
It is whether future guidance starts including AI search revenue, because if it does, this kind of move can have staying power. If not, Friday will look like a sharp, short pop from a stock that had a lot of pessimism priced in.
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