JFrog Defies SaaS Slump with 55% Surge as AI Demand Boosts Software Growth

On February 20 of this year, Shlomi Ben Haim, CEO of the Israeli software company JFrog, believed the company's story was coming to an end. Within fifteen minutes of the New York market opening, 12 million shares were sold in a panic, wiping out $700 million from its market cap in a flash. Behind the collapse was Anthropic's announcement of Mythos, its new artificial intelligence model capable of finding security flaws in software and computer systems. A large portion of cyber stocks fell that day on fears that Mythos would change the rules of the game in the industry, rendering cybersecurity companies seemingly obsolete. The truth is, JFrog is not strictly a cybersecurity company; until that February day, it was generally classified as a Software as a Service (SaaS) provider, suffering alongside other Israeli software firms from the negative sentiment in that sector, driven once again by AI threats.

Between December 2025 and that fateful February day, JFrog's stock plunged by 50% to a low of about $34 per share, similarly to Monday.com, Wix, or NICE. Yet since then, something remarkable happened to JFrog, and today it trades around $92, having even visited the $100 mark. Since the beginning of the year, it has generated a positive return of 55%, outperforming all major indices. In fact, at its current valuation of $11.5 billion, JFrog is worth as much as Monday.com and NICE combined. At its current market cap, JFrog is among the top five largest Israeli high-tech companies, trailing only Palo Alto Networks, Elbit Systems, Tower Semiconductor, and Check Point. All of this is true even though JFrog is smaller than Monday.com, NICE, Wix, or Check Point across almost every parameter, from revenues to headcount.

Can one survive the SaaS apocalypse? Software stocks have experienced one of the toughest periods in their history over the past 12 months. Yet as time passes, it increasingly appears that the four horsemen of the apocalypse—namely the AI giants—cannot bring down every firm. In cybersecurity, the launch of Mythos turned out in hindsight to be a positive turning point for sector players. The proliferation of OpenAI's AI agents exposed vulnerabilities, making customers and investors realize that precisely because of the evolution of these models, cybersecurity companies are needed more than ever. Concurrently, quite a few major software companies demonstrated resilience in their earnings reports, such as Salesforce, alongside even more surprising success stories.

Since its 2020 IPO, JFrog was perceived as part of the broader Israeli software cohort, but over the past year, something entirely different happened to it. Wall Street investors have recently been pricing JFrog differently than typical SaaS companies, causing its valuation multiples to open up unusual gaps compared to other players in the software sector. While NICE, Wix, and Monday.com trade at very low single-digit revenue multiples, JFrog trades at a multiple of nearly 20 times expected revenues. This multiple is exceptional even relative to the broader software industry, which trades at an average of around 4 times projected revenues. This comes even as, unlike the massive stock buybacks undertaken by most software companies, JFrog announced a relatively modest $300 million buyback program at the beginning of the year and has yet to fully execute it. The company has also not laid off employees.

What sets JFrog apart from its SaaS peers, and how did it manage to escape their fate? JFrog is an established company founded in 2008 that went public during the massive software funding wave of 2020. It was among the first to IPO during the COVID-19 pandemic, with executives ringing the opening bell remotely from an improvised studio inside their office with a green screen on the West Coast. JFrog's software was quite revolutionary at the start, enabling seamless binary version updates without human intervention. Following the IPO, JFrog made several smart acquisitions of Israeli startups that pulled it deeper into true cybersecurity territory—specifically code analysis during the authoring process. In the summer of 2024, JFrog acquired QWAK, a promising Israeli startup, in a cash-and-stock deal to accelerate its entry into artificial intelligence worlds. Through the acquisition, JFrog gained about 45 employees with AI experience, a talent pool considered among the most sought-after and expensive in the tech job market.

By reinforcing its solutions and acting as a relatively mature company operating for nearly 20 years, its software is now considered a "System of Record"—that coveted title that today separates software companies that have recovered since the winter crash from those that still cannot. The former group consists of companies whose technology sits deep and broad enough within an organization that no one will attempt to replace it out of fear of disrupting critical processes. This is precisely the difference between JFrog and companies like Monday.com or Wix: its products were inherently far better prepared for the AI upheaval. Paradoxically, the rapid adoption of AI-based development tools has made JFrog's solution more necessary than ever. Much more software is written today by autonomous agents without human touch, making it far more prone to errors and vulnerabilities. There is also simply much more of it, as agents work at a pace far exceeding human programmers. Yet the code written by agents must undergo binary compilation, and this is where JFrog steps in to manage the process.

Furthermore, it serves as the firewall separating the incident involving OpenAI, whose AI agents successfully penetrated the systems of the Hugging Face platform (which was subsequently sold to Nvidia). As more code is written automatically, with non-human agents being the only ones aware of what happens behind closed doors, companies require software like JFrog's to track developments, neutralize malicious actions, and properly advance clean, compliant software. For JFrog, AI turned out to be both a threat and, even more so, an opportunity. Since that dark day in February, JFrog has successfully pitched its new narrative to investors. Yet at its current valuation and the high multiple at which it trades, the burden of proof resting upon it is exceedingly heavy. Actual figures are far from justifying the valuation. It finished the second quarter of 2026 with revenues of $164 million, reflecting a 29% annual growth rate.

Another advantage JFrog enjoys over Monday.com, for instance, is that it did not structure its pricing model strictly "per employee" or "per seat," but rather based on resource consumption, storage volume, and other metrics. Therefore, even if a client does not increase its number of developers, the volume of software, updates, and binaries it generates grows dramatically, driving up payments to JFrog. Today, JFrog has 6,600 customers, with a high proportion of large accounts paying over $1 million annually and a net retention rate reaching a record 121% in the second quarter. In other words, existing clients are expanding their usage of its software. Its client roster includes Netflix, PayPal, Barclays, Airbus, Uber, and Qualcomm, reflecting broad diversification across various industries.

Nevertheless, alongside all these positive developments, JFrog issued very modest guidance for the third quarter, projecting revenues similar to those of the previous quarter, and is expected to finish the year with $650 million in revenue—a 22% growth rate compared to 2025. For comparison, both Monday.com and, of course, NICE generate revenues well above the $1 billion threshold; while NICE is growing at a slower pace and is highly profitable, Monday.com grows at a healthy double-digit rate. JFrog is still not profitable, posting an operating loss of $13 million in the second quarter. While this represents half the loss of the comparable period last year, it remains a disappointing figure for an established software company. In two weeks, JFrog will release its financial reports, which will need to provide concrete proof to investors, demonstrating accelerating growth and improved profitability. In the meantime, JFrog's stock is already pricing it like a princess, while actual results on the ground still remind observers that it has not entirely escaped the swamp.