Small Cap, Big Returns: Perion’s AI Advancements in Adtech OpenAI unveiled what appears to be the next step in the artificial intelligence (AI) revolution nearly a year ago with its large language model ChatGPT-4 chatbot, nearly every tech company has staked a claim to an AI connection in the hopes of attracting some of the increased interest in this technology.
Most investors are now aware of the AI plans of large tech companies such as the Magnificent Seven. As a result, those methods are already heavily priced into those equities. For example, Nvidia’s stock has skyrocketed this year as demand for its AI-related goods has skyrocketed. And Microsoft has benefited in part from its collaboration with OpenAI.
Rather than chasing corporations worth more than $1 trillion, investors seeking the highest returns from AI may be better suited focused on smaller companies. Perion Network (PERI 2.90%), a fast-growing Israeli adtech business best known for its intelligent hub that connects ad buyers and sellers, improving pricing and placement for both parties, stands out. However, Perion has launched a new AI that might help it break into a multibillion-dollar marketing industry.
What Perion is doing with artificial intelligence?
Perion established an AI lab a few years ago with the goal of generating new and innovative goods. SORT, a cookieless ad-targeting system, was previously announced by the business.
WAVE, which stands for Waveform Audio Voice Engine, is the latest invention to emerge from its AI research unit. It is a generative AI-powered audio advertising solution that develops and reads scripts in a human voice for ad spots served on podcasts, radio, and music streaming services. Because the creative component is boundless, WAVE can target and adapt ads in ways that traditional audio advertising with a human voice-over could not – it would be too expensive and inefficient.
Weather, location, time of day, and the device being used can all be used to personalize the adverts.
Albertsons Companies (ACI 0.73%), the nation’s second-largest grocery operator, is WAVE’s first major customer. The grocer is impressed with WAVE’s ability to provide personalized adverts. Tony Colvin, Albertsons’ director of paid media, told Perion, When your team brought us the AI script and voice, we were blown away. It was quite difficult to tell that it was an AI voice — right down to the intricacies of how specific products are spoken.
One of the most common criticisms leveled at generative AI tools like ChatGPT is that, despite their obvious capabilities, they lack usable applications. Perion’s WAVE clearly demonstrates how generative AI can create value for advertisers and customers in ways that prior technologies could not.
The solution should help the corporation expand its presence in the $6.8 billion digital audio industry in the United States, which is predicted to grow to $9.7 billion by 2027.
In its third-quarter financial report, Perion also revealed some other AI-based inventions, such as high-impact connected TV (CTV) advertising that broadcasts alongside sporting events. The device may detect a lull in the action and display an advertisement when a player is substituted. Another example is a FanDuel ad campaign that played immediately after a Yankees home run, allowing the business to capitalize on an unmissable moment with the ad running as the player circles the bases.
Why is Perion stock a good investment?
Perion’s overall revenue increased 17% year on year in the third quarter to $185.3 million, while adjusted profits before interest, taxes, depreciation, and amortization (EBITDA) increased 29% to $42.7 million. Revenue from connected TV increased 39% to $7.9 million in the quarter.
In the quarter, the company demonstrated significant growth in retail media, with revenue increasing 112% to $13 million. In an interview, Perion CEO Tal Jacobson stated that the company has concentrated on retail media because you actually have the chance to work with big data. He noted that elements such as purchase frequency, location, and promotions all contribute to a tool like WAVE being more valuable to shops than to other types of advertisers. A retailer, such as Albertson’s, may modify ads in hundreds of different ways that an automaker is unlikely to use.
Perion has a strong track record of providing growth and beating the stock market in recent years. The company should continue to generate outstanding results when new AI technologies emerge, such as WAVE.
The stock is also shockingly inexpensive, with a P/E ratio of only 12. Perion Network appears to be a good chance to outperform as it continues to innovate in AI and enter new areas such as retail media.
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