Hosting is not dead: AI is changing the market, but the box is still there

Hosting has been making headlines for years, rising and falling in financial reports. First expected to die due to public cloud. Then because of website builders. Later because of SaaS. Now the dominant narrative is that artificial intelligence will take over the business of traditional hosts because anyone will be able to create a website with a prompt, deploy it on a modern platform, and forget about hiring hosting, templates, or content management systems.

The thesis contains some truth. AI is transforming the onboarding funnel, especially for new customers. But the numbers tell a more nuanced story: traditional hosting remains a business with recurring revenues, low churn, upfront billing, and plenty of EBITDA converting into cash flow. The stock market is punishing it, yes. But operationally, the business hasn’t necessarily broken down yet.

The best example can be seen in publicly listed companies. GoDaddy’s market cap at the end of 2024 dropped from $28.6 billion to around $10 billion as of June 24, 2026. Wix experienced an even sharper correction, from $12.9 billion at the end of 2024 down to $1.7 billion. Tucows is roughly $150 million. IONOS is a relative exception: it increased since its IPO and stands around $4.2 billion, though it has also corrected from its highs.

The key question is: what is the market discounting? And the answer seems clear: not an immediate revenue crisis, but the fear that AI will destroy the most profitable layer of web capture and creation.

Spain already experienced its own hosting consolidation

To understand the current moment, it’s helpful to look back. Hosting was, for years, one of the most attractive digital businesses for tech entrepreneurs. It wasn’t as glamorous as social networks nor as scalable as pure software, but it had something very appealing: recurring clients, parked domains, upfront payments, and a need that was hard to eliminate.

In Spain, history is full of deals that explain how the sector consolidated. Eneko Knörr launched Hostalia; Josean Paunero promoted Hostinet; Yago Arbeloa created Sync; Faustino Jiménez founded RapidSite, which later became part of Acens, and then led Arsys. Hostalia was sold to Acens in 2007. Arsys bought Sync in 2011 and ended up integrated into 1&1, the German group now known as IONOS. Hostinet was acquired by Total Webhosting Solutions, one of Europe’s most active consolidators.

During the same cycle, other Spanish projects joined Acens. Ferca Networks, founded by David Carrero, and Veloxia Network, driven by Javier Primo and David Sánchez, became part of Acens in 2008. It was a time when many Spanish hosts realized that the market was no longer rewarding only local portfolios but increasingly valuing scale, operational efficiency, customer acquisition, and bundled services.

David Carrero, now co-founder of Stackscale and VP of Sales in the company, now part of Aire, sums it up with a mix of nostalgia and realism: “There’s a market for a long time, but you have to reinvent yourself constantly. Good times, I remember when we sold Ferca Networks to Acens in 2008 and became partners. Now we’re fully committed to Stackscale, but within Aire.”

That statement fits well with today’s moment. Hosting isn’t dying. It’s reinventing itself, re-packaging in a different way, or being integrated into broader platforms of cloud, connectivity, security, and managed services.

Markets punish the narrative, not necessarily the business

Market caps show significant corrections. GoDaddy, Wix, and Tucows are worth much less than their recent peaks. Wix is the most extreme case because its historical proposition—easy website creation with templates—is precisely the layer that generative AI can target first. If a user can describe a website, generate it, and deploy it without touching a template, the traditional builder’s unique value diminishes.

Valuation multiples reflect this. As of 06/22/2026, Wix was trading at 0.6 times estimated sales, 4.4 times forward EBITDA, and 3.5 times last-twelve-months cash flow. GoDaddy stood at 2.4 times sales, 7.3 times EBITDA, and 6.1 times cash flow. IONOS appeared the most valued of the group with 3.3 times sales, 8.6 times EBITDA, and 8.9 times cash flow.

A quick interpretation is that the market believes less in Wix than in GoDaddy or IONOS. More precisely, it perceives higher risk in models where web creation is central and less in businesses with a broader base of domains, email, hosting, productivity, cloud, security, and SME services.

The interesting part is that the financials haven’t yet reflected operational collapse. GoDaddy increased revenues from $4.091 billion in 2022 to $4.951 billion in 2025, with operating income rising from $550 million to $1.138 billion in the same period. Wix also grew revenue from $1.388 billion to $1.993 billion, though its operating profit remains highly volatile. IONOS closed 2025 with approximately $1.547 billion in revenue and an operating profit of $410 million in comparable data. Tucows maintains moderate revenue growth but is penalized by operational losses related to businesses like fiber.

The central point is: the market discounts future risk before it clearly appears on the income statement. It doesn’t wait for clients to stop renewing domains or hosting plans. Instead, it adjusts valuation when it believes acquiring the next customer will become more expensive, harder, or less profitable.

AI doesn’t kill hosting but changes the funnel

Traditional hosting had a very clear funnel: domain, hosting plan, email, template, CMS, and annual renewal. Customers entered due to a simple need and ended up paying for multiple services over years. The friction to switch was high—not necessarily because of technical complexity but due to laziness, perceived risk, and lack of incentives.

AI mainly transforms the top part of that funnel. Assisted creation tools, vibe coding, programming agents, and platforms like Vercel, Framer, Lovable, or similar are capturing a new generation of web projects. When a model generates code and directly suggests deployment, the traditional hoster loses the chance to be the first choice.

Carlos García Blanco, CEO of Kumori and Chief Strategy Officer at Disid, pointed out plainly: traditional hosting just provided space and charged for renewal. Today, people want their websites to be built and optimized almost automatically. Providers that don’t incorporate automation into their core services risk managing legacy projects instead of innovating.

This diagnosis seems accurate for new customers, especially developers, digital creators, and small startups starting from zero. But it doesn’t explain the entire market. Millions of websites aren’t migrating just because a better tool appeared. SMEs change slowly. Agencies have processes. Domains are renewed. Emails matter. Old websites still work. Familiar providers continue to carry trust.

Therefore, AI’s impact will be slower than headlines suggest. It’s not an instant explosion but an erosion of future growth and valuation multiples.

M&A activity slows but doesn’t disappear

Consolidation has been the main growth driver for European hosting. The logic was straightforward: buy small portfolios, integrate into a larger platform, reduce costs, improve margins, and repeat. It worked well for years because many small or medium operators had recurring clients and limited capacity to compete at scale.

M&A deals in European web hosting rose from about 30 in 2015 to 76 in 2021. Then there was a correction: 55 in 2022, 39 in 2023, 57 in 2024, and 47 in 2025. Not a dead market. There are still more deals than a decade ago. But the peak of 2021 is distant.

Two reasons explain this moderation: First, financial considerations—higher interest rates, lower multiples, and greater technological uncertainty—lead to more disciplined valuation. Second, the industry itself has fewer sizable medium assets available after twenty years of acquisitions. Large independent players like Dinahosting in Spain are still around not because of lack of options but because they’ve chosen not to sell.

For small to medium hosts, the dilemma hardens. Competing solely will require investing in automation, AI, support, security, user experience, or new deployment layers. Selling might make sense if integrated into a platform capable of supporting those investments. Staying stuck in the middle, without scale or a different proposal, is increasingly pointless.

Cash flow remains the main attraction

Perhaps the most important insight is not the fall in valuations but the transition to cash flow. GoDaddy generated EBITDA of $1.312 billion LTM and free cash flow of $1.442 billion in the same period, according to shared analysis. When free cash flow exceeds EBITDA, it typically indicates a very favorable working capital dynamic: customers paying in advance, low capital expenditure needs, and a subscription model with low churn.

Wix presents another interesting anomaly: negative EBITDA of $72 million over the last twelve months but $484 million in free cash flow. Tucows, with $24 million EBITDA and similar free cash flow, shows a near-complete conversion. IONOS is a partial exception, with $511 million EBITDA and $274 million free cash flow LTM, near 90% conversion in 2024.

These figures explain why hosting still attracts buyers. It might not be the most exciting business, but a portfolio of recurring, prepaid clients that requires minimal maintenance investment is highly valuable. Even if growth slows, cash flow sustains interest.

The next big market staple could be data centers, driven by AI, energy, and compute demand. But that doesn’t make hosting an worthless asset. It makes it a more mature business, with less organic expansion potential, more tension in customer acquisition, and the need to reinvent its value proposition.

Hosting survived the cloud because many SMBs didn’t want to manage infrastructure. It survived SaaS because domains, email, and websites remained basic needs. It will survive AI if it moves away from simply selling space and begins selling results: automated online presence, security, performance, maintenance, simple deployment, integration with business tools, and genuine support.

AI doesn’t kill hosting. It kills the hosting that believed renewing a plan was enough.

Frequently Asked Questions

Will AI end traditional hosting?
Not immediately. AI might slow new sign-ups for template-based or basic hosting models, but existing portfolios have low churn and inertia.

Why did GoDaddy and Wix stocks fall so much?
The market discounts the risk that AI will change web creation and devalue some traditional models. Wix is more exposed due to its heavy reliance on website builders.

Is M&A still active in European web hosting?
Yes. Deals declined from the 2021 peak but in 2025, there are still roughly 47 acquisitions, above 2015-2017 levels.

What makes a host attractive to buyers?
Recurring customer base, diversified clients, managed domains, upfront payments, low churn, and high EBITDA-to-cash conversion.

What should small and medium hosts do?
Focus on automation, AI, security, and managed services, or join bigger platforms. Remaining just as a basic provider will become more difficult.

Reference: Joshua Novick on LinkedIn