This artificial intelligence (AI) stock will make big moves in 2025. Here’s why.

Artificial technology (AI) is here to stay. Large Language Models (LLMs) like ChatGPT are already disrupting many industries with AI-generated text, images, and even video. The next generation of LLMs will be even stronger, and we probably haven’t even imagined the wave of killer apps yet.

But no one knows who will make the next big AI move. The big winners in this stock market boom are largely generalists — the makers of the chips and computer systems that power today’s AI software. And even the market’s most dazzling darlings have faced investor skepticism of late. AI chip designer Nvidia (NASDAQ: NVDA) shares are down 16% from their recent highs and server systems builder Super Micro Computer (NASDAQ: SMCI) it took a 63% swan dive in about five months. It could recover and explode again, or maybe it’s still experiencing further price cuts.

So how do you invest in the exciting AI space without running into a potentially overvalued landmine? In my opinion, the trick is to start with an AI stock at a fair or even undervalued price. Step Two: Make sure it’s a high-quality company with the potential to disrupt your chosen industry in the long term. It’s a short checklist, but it also produces a short list of results.

Today, I would recommend approaching the AI ​​space from a very different angle. You looked Fiverr International (NYSE: FVRR) lately? This stock looks poised to make a big splash in 2025.

Fiverr’s Business Model and Revenue Streams

Fiverr runs an online marketplace for freelance services. The company makes it easy for freelancers to advertise their services and for service buyers to get the help they need. Instead, Fiverr pays a small fee for each service purchase transaction. Popular activities include coding, writing, graphic design, and film editing.

It’s a little more complicated than that, but there’s a picture of Fiverr’s basic business plan.

The company has been around since 2010, but it’s still a small fish in a big pond. The overall goal is to change the way people do business, and that’s a pretty ambitious goal. Management estimates that the domestic market for the types of services you find on Fiverr will be worth $247 billion in 2021. But most of these freelance services are searched for and found offline, mostly through old-school methods like personal acquaintances, newspaper ads or social ads. media posts.

The opportunity to take the friction out of that onboarding process is huge, and Fiverr is just getting started. The company collected just $298 million in revenue in 2021, or about 1.2 percent of the independent services market. Topline revenue has grown 26% since then, reaching an annualized run rate of $376 million today. At the same time, the target market also continues to grow; Fiverr’s growth potential is still enormous.

The story continues

Will Generative AI Help or Hurt Fiverr?

So far, Fiverr may not sound like much of an AI stock. In fact, many investors have pulled out of Fiverr stock because they see generative AI tools like ChatGPT’s text creation and Midjourney’s digital images as a direct threat to the company. Who needs a freelancer when you can get the help you need from a low-cost generative AI tool, right?

As it turns out, though, those generative AI tools aren’t very useful without human guidance. Finding the right inputs to generate usable AI-based content is a bankable skill, as is sifting and editing the generated output. And Fiverr is happy to connect you with a freelancer who can help.

Therefore, generative AI might seem like a threat, but Fiverr actually sees it as another potential channel for selling services.

“We are at the beginning of unleashing the full potential of artificial intelligence in our market, and we believe it will be a tailwind for many years to drive product innovation and growth,” Fiverr CEO Micha Kaufman said on the earnings call from the second quarter in July, with analysts.

The potential of Fiverr

Fiverr’s stock soared in 2020 as millions found themselves stuck at home with plenty of free time to sell their services digitally. Share prices started falling as soon as effective vaccines against COVID-19 became widely available, and skeptics haven’t looked back. Fiverr shares are currently trading 92% below their early 2021 peak prices.

However, the business never stopped making sense. We’ve already mentioned Fiverr’s growing revenue, and the growth story continues below in the financials. Free cash flow has more than tripled over the past two years, and bottom line earnings have recently turned positive.

The stock probably deserved a price correction in 2021, but the bear market makers went too far. Fiverr is a successful and profitable business that aims to disrupt an enormous target market. However, its stock trades at just 11 times free cash flow, 2.6 times trailing sales and 9.1 times forward earnings estimates.

So if you’re looking for a strong AI stock in the bargain bins of Wall Street, I highly recommend you take a closer look at Fiverr. This stock is poised to rise as top-line sales increase and bottom-line profits skyrocket. The bullish business trend is already underway and I’m just waiting for bearish investors to take notice. I predict the stock will make big moves next year and I’ll be along for the ride.

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Anders Bylund has positions in Fiverr International and Nvidia. The Motley Fool has positions in and recommends Fiverr International and Nvidia. The Motley Fool has a disclosure policy.

Prediction: This artificial intelligence (AI) stock will make big moves in 2025. Here’s why. was originally published by The Motley Fool