Unveiling a Potential Artificial Intelligence (AI) Investment with a Decade-Long Holding Period (Hint: It's Not Nvidia)

Unveiling a Potential Artificial Intelligence (AI) Investment with a Decade-Long Holding Period (Hint: It's Not Nvidia)

Modern technology, especially Artificial Intelligence (AI), is all the hype these days, and no company has reaped the benefits of this new trend on Wall Street as much as Nvidia. Their shares have surged by almost 200% this year! However, if you're looking for less popular options that will also profit from the increased demand for AI-related services, consider companies like Fiverr.

After an impressive third-quarter performance, Fiverr's shares saw a 30% surge in just one day! While a strong quarter might not mean much in the grand scheme, let's dive into why it's worth keeping an eye on Fiverr's shares for the next decade.

Fiverr's foray into AI

Fiverr's platform is like a hub for freelancers across numerous fields. Companies, or sometimes individuals, come here to find the right talent for their projects. The appeal of freelancers is their affordability and ease of integration, whether it's for a one-time project or recurring work. Fiverr simplifies the process further by providing freelancer portfolios, ratings, and reviews.

With AI gaining prominence, businesses have realized its potential benefits to their operations. Many lack the resources to hire full-time AI specialists. That's where Fiverr comes in. It connects smaller companies with AI experts via its platform. Moreover, Fiverr has introduced several AI-based tools to assist its customers, such as Dynamic Matching, which helps businesses with complex requirements find suitable candidates.

Fiverr has more AI tools in the pipeline that it claims will enhance productivity and efficiency on its platform.

Profitability is key

AI opens up numerous growth opportunities for Fiverr, but it has also focused on cost-cutting and efficiency in recent years. This approach has yielded positive results. The company is now profitable, and has maintained this status during certain periods. The third quarter was no exception. Fiverr's revenue increased by 7.8% to $99.6 million YoY. Despite a 9% decrease in active buyers compared to the previous year, the average spending per buyer increased by 9%.

Fiverr's GAAP net earnings per share decreased to $0.04 from the $0.07 EPS reported in the same quarter last year. However, its adjusted EPS increased by 16% to $0.64. The era of growth at all costs is over. Investors now favor companies that demonstrate financial discipline along with strong growth potential. Fiverr is making significant progress in this regard.

The long-term perspective

Fiverr's exploration of AI is just beginning. Meanwhile, the company plays a significant role in the gig economy, which, despite a decline from its pandemic highs, still boasts attractive long-term prospects. The advantages of freelancing for businesses are clear, but what motivates people to opt for freelance work over traditional employment? Simply put, flexibility.

Gig work allows individuals to spend more time with their families, avoid the stressful commute to a 9-to-5 job, be their own bosses, and, in some cases, work remotely while traveling. It's no wonder, then, that the gig economy is projected to continue growing. Fiverr's AI tools and the demand for AI-related work on its platform will serve as powerful long-term growth drivers. Additional tailwinds will emerge as well.

Fiverr's acquisition of dropshipping specialist AutoDS provides access to another high-growth industry. Despite a post-earnings price surge, Fiverr's shares remain a promising investment opportunity.

In light of Fiverr's third-quarter success, some investors might consider investing in the company due to its potential in the AI sector and the growing gig economy. With Fiverr's recent profits and the introduction of AI-based tools, it showcases a balanced approach of growth and financial discipline, making it an appealing investment option in the finance world.

As Fiverr continues to innovate with AI and expand into the gig economy, the company's long-term profitability is likely to be significantly impacted. This forward momentum, along with its recent acquisition of AutoDS, solidifies Fiverr as a compelling investment, as it delves into new growth opportunities and capitalizes on the increasing demand for AI-related services.

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