Going parabolic in the stock market is a rare feat, but many artificial intelligence (AI) stocks are already doing so. super microcomputerFor example, it has increased by 161%. arm has just soared nearly 50% on its earnings report, and investors appear to be on their toes trying to get their hands on the next big AI winner.
Stocks of small ad tech companies Perion Network (Peri -0.94%) After the company’s fourth-quarter earnings report on February 7, the stock price was moving in the opposite direction. The stock price fell 20% as the company’s 2024 earnings growth outlook was positive. Perion expects revenue this year to be between $860 million and $880 million, which would be the highest on record. Organic growth was 10%, reflecting the slowdown in video advertising occurring across the industry.
But smart investors may want to buy this ad tech stock on the spur of the moment. The company is doing a lot of work on his AI, which should pay off in the coming years.
Image source: Getty Images.
Perion’s AI portfolio expands
Perion is best known as an intelligent hub that connects ad buyers and sellers to optimize purchasing and placement. Although its technology relies on machine learning algorithms, Perion’s work in generative AI could be even more exciting.
A few months ago, the company launched WAVE, an audio advertising program that uses generative AI to narrate ads. This allows you to customize your ads depending on variables such as time, location, audience, and even weather.
Using such technology is cheaper to scale than using human voice actors and delivers better results than traditional advertising, increasing visit rates by 2.4x and sales by 117%, according to Perion data. did.
This technology has been adopted by retailers such as: albertson’s Available on major audio platforms such as and Pep Boys. spotify, sirius xm radio, iHeartRadio. This is one of the many strategies the company is implementing, leading to a surge in retail media revenue. The division’s sales increased by 196% to $20.2 million in the fourth quarter.
Another new innovation from Perion includes a program that displays ads on linear and streaming TV when viewers pause the show they’re watching. Currently, the program is run in partnership with DirecTV.
Finally, the company also completed another acquisition in the fourth quarter, spending $100 million to acquire Hivestack, a full-stack programmatic digital out-of-home (DOOH) advertising company. Hivestack’s technology helps you advertise on digital billboards and other outdoor media spaces. The deal gives Perion a presence in a fast-growing advertising channel that was previously undervalued.
Why are stock prices soaring?
There are a number of factors that could provide strong tailwinds for Pelion over the next few years.
First, the growth of AI and the company’s own investments in AI will improve ad targeting and improve return on investment for marketers, thereby driving increased spending on advertising. With his investment in Intelligent Hub, WAVE, and SORT, a cookie-free tracking technology, Perion is well-positioned to take advantage of the AI boom.
Digital advertising is also recovering across the board, as the recession that many expected didn’t happen, and brands are starting to ramp up their ad spend.
Perion also aims to grow its business to become a one-stop adtech shop and continue to make acquisitions to increase its competitive advantage.
Perhaps most importantly, the company’s stock price looks like a good candidate for a parabola. This is because, despite its track record, the company is significantly undervalued, trading at a price-to-earnings ratio of less than 11 times, a significant discount compared to many of its peers. We are experiencing strong growth.
While it may make sense to buy back shares at this valuation, Perion CEO Tal Jacobson said in an interview that the business needs to be repurchased to drive long-term shareholder returns. He said it is better to invest in growth.
Perion is expected to continue releasing new products and features this year, and possibly making new acquisitions. If the company can beat guidance, investors could return to the growth story and the stock could soar.
Jeremy Bowman has a position at Perion Network. The Motley Fool is involved with and endorses his Spotify technology. The Motley Fool recommends Super Micro Computers. The Motley Fool has a disclosure policy.
