1 Small-Cap AI Stock That Could Go Parabolic

Going parabolic is a rare feat on the stock market, but more than a few artificial intelligence (AI) stocks have already done so. Super Micro Computer, for example, is up 161%. Arm just jumped nearly 50% on its earnings report, and investors seem to be falling over themselves to get their hands on the next big AI winner.

Shares of small-cap adtech company Perion Network (NASDAQ: PERI) were moving in the opposite direction after its fourth-quarter earnings report on Feb. 7. The stock tumbled 20% as its revenue growth guidance was on the lighter side for 2024. Perion predicted revenue of $860 million to $880 million this year, representing an organic growth rate of 10%, which reflects a slowdown in video advertising that’s taking place across the industry.

However, savvy investors may want to buy the dip on this adtech stock. The company’s making a number of moves in AI that should pay off over the coming years.

Perion’s AI portfolio grows

Perion is best known for its intelligent hub that connects ad buyers and sellers, and optimizes purchases and placements. That technology relies on machine-learning algorithms, but Perion’s work in generative AI could prove to be even more exciting.

A few months ago, the company launched WAVE, an audio advertising program that uses generative AI to narrate ads. This allows ads to be customized according to time, place, target audience, and even variables like the weather.

Using such technology is cheaper at scale than using human voice actors, and, according to Perion’s data, it gets better results than traditional ads, with 2.4 times the visit-rate lift and 117% the incremental sales lift.

The technology has been embraced by retailers like Albertson’s and Pep Boys, and is available on leading audio platforms like Spotify, SiriusXM Radio, and iHeartRadio. It’s also one of a number of strategies the company is implementing that has led to its revenue in retail media soaring — sales in that segment rose 196%…