In its July 29, 2026, report on first half securities class action lawsuit filings (here), Cornerstone Research explained the increased levels of 1H26 securities suit filings as being due in significant part to “a surge in litigation involving artificial intelligence-related claims .” In the latest example of this type of AI-related securities litigation, as well as an example of the kinds of allegations that can lead to these kinds of suits, late last week a plaintiff shareholder sued Israeli cloud web development platform company Wix.com, alleging the company had overstated its AI-related capabilities and prospects, while understating its AI-related costs. A copy of the July 24, 2026 complaint can be found here.
Background
Wix offers services that allow users to create and customize professional websites. At relevant times, the company allegedly tried to remain competitive by providing its customers with AI-powered offerings. In January 2026, the company launched Wix Harmony, intended to be the Company’s flagship AI site builder, allowing users to generate designs, contents, and layouts automatically.
The complaint alleges that during the class period, the company touted its purported leadership in AI-powered web development, which it claimed set it apart from competitors. The complaint alleges that in reality the company’s costs were “accelerating at an alarming rate as it struggled to maintain its relevance in the market, particularly as competing AI technologies and services were increasingly outpacing the capabilities of Wix’s own products.”
On May 13, 2026, the company reported disappointing financial results for the 1Q26, including earnings and revenue below consensus expectations, as well as a decline in operating margins attributed to softness in its professional developer business.
In an earnings call the same day, the company acknowledged that Wix’s professional developer customers were using competing AI tools, as well as that its Harmony platform had “holes” and “missing capabilities,” and that there had been delays in delivering product updates, as a result of which the company had fallen behind “the workflow and needs of” professional developers. According to the complaint, the company’s shares fell about 27% on this news.
The Lawsuit
The complaint alleges that during the class period, the defendants made false or misleading statements or failed to disclose that: “(i) Wix had overstated the competitiveness and performance of its AI product offerings relative to those offered by other companies; (ii) Wix had understated the costs associated with developing and promoting its AI product offerings; (iii) accordingly, Defendants overstated the commercial and financial benefits of Wix’s product offerings; and (iv) as a result, Defendants’ public statements were materially false and misleading at all relevant times.”
The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks damages on behalf of the class.
Discussion
I think this categorization provides a useful framework to think about and to analyze the AI-related securities litigation.
The defendant in this lawsuit appears to fit in the AI development company category, as it is creating and trying to market AI tools for professional developers to use in website design and creation. (The company’s customers apparently would seem to qualify as AI users.)
According to the Cornerstone Research report, there previously had been 6 AI-related securities suit filings involving AI developers in 2026, making this new lawsuit the 7th. According to the Cornerstone Research report’s analysis, AI developers are the most frequent target in the AI-related securities suits filed so far this year.
In addition to the complaint’s AI-washing type allegations, this new complaint also has allegations concerning the defendant company’s AI-related spend – specifically, that the company underreported the costs associated with developing and promoting its AI product offerings.
As companies face pressures to incur costs in order to keep up in the AI arms race, AI spend-related allegations are an increasingly important part of AI-related securities suit allegations. Readers may recall that AI spend related allegations were in fact a key component of the AI-related lawsuit filed last year against Oracle and in the lawsuit more recently filed against Microsoft. As AI associated cost become increasingly astronomical, it seems probable that AI spend-related allegations will become an increasingly important part AI-related securities suit complaints.
The Cornerstone Research report says that as of this year’s mid-point, there had been a total of 15 AI-related securities suits filed so far in 2026, compared to 16 for the full year 2025, putting the 2026 AI-related securities suit filings on a pace to almost double the number of 2025 filings. (Cornerstone Research’s filing numbers differ slightly from our own tallies, but the figures in both data sets are directionally consistent.) Under the Cornerstone Research tally, this new lawsuit filing brings the year’s count of AI-related filings to 16, with more undoubtedly to come. It seems clear that by year end the AI-related litigation will prove to have been an important factor in the total number of securities class action lawsuits filed this year.
There is one final note I want to add of significance for D&O insurance underwriters, and that is to observe that while these AI suits involve AI-related allegations, they otherwise are entirely conventional securities class action lawsuits. Other than the AI allegations, there is really nothing new about these suits.
For that reason, in thinking about what the underwriting implications of these AI suits, D&O underwriters don’t have to come up with an entirely new underwriting approach. Rather, they need to think about how to adapt existing tools to this new category of suits. The type-of-defendant framework Cornerstone Research proposed is one good starting point. Another useful starting point is the type of AI-related allegation, starting, for example, with AI washing type allegations. In future posts, we intend to further explore the relevance of these kinds of analytic frameworks in developing an underwriting approach to AI-related D&O claims risk.