Bank of America Securities poured cold water on Doximity (Doximity (DOCS)) on Monday, downgrading the stock and warning that the company's push into artificial intelligence comes with serious execution risks.

Analyst Allen Lutz cut his rating on Doximity from Buy to Underperform and slashed his price target to $20 from $38, reflecting a dimmer view of the company's near-term prospects. The stock was already down about 2.8% to $20.29 in Monday trading.

The downgrade comes after Doximity reported mixed fiscal fourth-quarter results and issued soft guidance for the current year. On an investor call, the company acknowledged that "short-term demand in the HCP Digital Pharma ad market [is] soft and visibility still limited," blaming "policy uncertainty remaining elevated and increased macro risk." The company expects overall market growth to be "modest this year, likely at or below 5%."

That's a tough backdrop for any company, but BofA's concerns go deeper. Lutz noted that Doximity remains the leader in physician-targeted pharma advertising, with products like its newsfeed, telehealth platform, and AI assistant DoxGPT. And the company is making what Lutz called "appropriate strategic investments" to compete with emerging AI players like OpenAI and OpenEvidence.

But here's the problem: those competitors have deep pockets and are investing aggressively. Doximity's reinvestment cycle could be "longer and more intensive than previously expected," Lutz wrote. The company's reliance on frontier model providers may also put it at a cost disadvantage on AI. And to keep growing, Doximity may need to lower its pricing, which would put structural pressure on its industry-leading margins.

In other words, Doximity is caught between a soft ad market and an expensive AI arms race. The company's ability to expand spending from existing pharma clients and capture new AI-related budgets is now in question, given the financial firepower of its rivals and the fact that top pharma companies already spend heavily on the platform.

For investors, the message is clear: the road ahead for Doximity looks bumpier than it did a few months ago, and the payoff from its AI bets may take longer—and cost more—than expected.