AI stock Opera has outperformed semiconductor giant Nvidia in 2023, gaining 203% compared to Nvidia’s 187% surge in stock price. Despite this impressive growth, Opera remains a much cheaper investment option. With a market capitalization of just $1.6 billion, Opera presents an attractive opportunity for investors.
Opera, based in Oslo, Norway, has developed a web browser that offers superior functionality and usability compared to rivals like Microsoft Edge and Google Chrome. Unlike its competitors, Opera’s browser includes built-in features such as an ad blocker, VPN, messaging service, and even a crypto wallet. Most notably, Opera incorporates AI browsing by default.
Opera has developed its own AI chatbot called Aria, capable of various tasks including answering questions, writing code, and creating social media posts. Additionally, Opera has partnered with OpenAI, ensuring users have access to the powerful AI duo of Aria and ChatGPT.
In addition to its standard browser, Opera has also introduced a version specifically aimed at gamers called Opera GX. This browser includes features like CPU and memory limiters, optimizing processing power for gaming, and incorporates popular chat and streaming platforms like Discord and Twitch.
Opera’s focus has shifted towards monetization rather than aggressive growth in user numbers. The company generates significant revenue from search and advertising and is strategically targeting users in regions with higher monetization rates to maximize its profitability. This shift in strategy has led to a remarkable 174% increase in average revenue per user since 2019.
Opera has consistently been profitable since 2017, with the exception of 2021 due to an impairment charge. Its profitability has allowed it to return value to shareholders through share repurchases and dividends. The company has already spent $198 million on buybacks since 2020, equivalent to 28% of its outstanding shares, and it recently distributed its first-ever special dividend of $71 million.
Compared to its peers in the AI industry, Opera’s valuation remains highly attractive. With $346 million in trailing 12-month revenue and a market capitalization of $1.6 billion, Opera’s price-to-sales (P/S) ratio stands at just 4.6. This is significantly lower than AI software company C3.ai’s P/S ratio of 13.1 and Nvidia’s P/S ratio of 39.3.
While Opera may not reach the same level as Nvidia in the AI industry, its faster growth in 2023 and modest valuation suggest considerable upside potential. With its innovative browser and specific focus areas such as chatbot-powered search and gaming, Opera is well-positioned for continued growth. With a market that is yet to be fully tapped, Opera’s stock could be an attractive investment option for those looking to capitalize on the AI industry’s potential.
