Opera’s AI Stock Outperforms Nvidia in 2023 with Impressive Growth and Value
In the fast-growing world of artificial intelligence (AI) stocks, one small-cap company has managed to outshine even industry giant Nvidia. Opera, based in Oslo, Norway, has seen its stock surge by a remarkable 203% this year, surpassing Nvidia’s impressive 187% gain. What’s even more enticing for investors is that Opera remains attractively valued, making it an appealing opportunity despite its significant growth.
Opera has made a name for itself with its high-performance web browser, which offers a range of features and enhanced usability compared to competitors like Microsoft Edge and Google Chrome. Unlike other platforms that require users to install additional plug-ins for features like ad blockers, VPNs, messaging services, and crypto wallets, Opera’s browser comes with all of these built-in. But what sets Opera apart is its powerful AI capabilities.
The company has developed its own generative AI chatbot named Aria, capable of answering questions, writing code, and creating social media posts. Additionally, Opera has partnered with OpenAI, incorporating their advanced AI technology, ChatGPT, into its browser. This combination of AI tools provides users with a unique browsing experience and enhanced functionality.
Opera has also captured the attention of gamers with its special browser called Opera GX. This tailored version of the browser includes CPU and memory limiters, ensuring users have sufficient processing power for gaming. It also features popular gaming communication platforms like Discord and Twitch in the sidebar. With 21.7 million monthly active users in the first quarter of 2023, Opera GX has gained significant traction among gamers.
While Opera’s user count has declined lately due to a shift in marketing strategy aimed at monetization rather than outright growth, the company has successfully generated revenue through its search and advertising business. In 2023, Opera expects its revenue to triple, reaching up to $390 million by the end of the year. Remarkably, Opera has been profitable every year since 2017, with the exception of 2021 when it incurred an impairment charge.
Efficiency has been a key focus for Opera, leading to a 174% increase in average revenue per user (ARPU) since 2019. The company’s profitability has allowed it to reward shareholders through share repurchases and dividends. Opera has spent $198 million on buybacks since 2020, equivalent to 28% of its outstanding shares, which has organically lifted the stock price. Additionally, the company paid its first-ever special dividend of $71 million in February 2023.
In terms of valuation, Opera stands out for its reasonable price-to-sales (P/S) ratio. With $346 million in trailing-12-month revenue and a $1.6 billion valuation, Opera’s P/S ratio of 4.6 is notably lower than AI software company C3.ai’s ratio of 13.1 and Nvidia’s high multiple of 39.3. While Nvidia rightfully trades at a premium due to its significant influence in the AI industry, Opera presents a compelling growth opportunity in the evolving internet search landscape.
As the industry shifts toward chatbot-powered search, Opera is well-positioned alongside Microsoft’s Bing and ahead of Google’s Bard platform. Leveraging the battle-tested ChatGPT tool, Opera’s progress in this area is commendable. Furthermore, the company sees immense potential in its gaming browser, Opera GX, with an addressable market of up to 500 million users. With less than 5% penetration, Opera has a long runway for growth in the gaming sector.
While Opera might not become the next Nvidia in the AI space, its impressive growth outpacing Nvidia this year combined with its attractive valuation suggests there could be significant upside ahead. As the demand for AI-powered solutions continues to increase, Opera’s innovative browser offerings and profitability make it a compelling option for investors looking to capitalize on the AI industry’s growth.
