Opera’s Aria AI Revolution: A Stock Worth the Overture?

Opera Limited has orchestrated a groundbreaking move by making its built-in browser AI, Aria, available to all desktop and gaming users, along with Opera for Android beta users, without the hassle of an account login. This shift opens the floodgates for a broader audience to savor Aria’s cutting-edge features, ranging from Image Generation to Page Context mode.

Riding the wave of innovation, Opera is extending the reach of Aria to Android and iOS platforms, a strategic endeavor to infuse advanced AI capabilities seamlessly into its Opera One, Opera GX, and mobile browsers, catalyzing a transformative experience for everyday browsing.

Unveiling OPRA’s Potential: The Role of Portfolio and Partnerships

This bold development neatly dovetails with OPRA’s ongoing endeavor to amplify user accessibility and foster AI-driven browsing, reaffirming its steadfast commitment to sustainable technological advancements.

Opera’s Positive Growth Trajectory

Opera’s shares have climbed by 19% year-to-date, though slightly lagging behind the broader Computer & Technology sector’s return of 23.3%. Nonetheless, the company has outperformed the Internet – Content sector, which saw a rise of 5%.

Opera’s innovations, especially the Aria AI upgrades, have significantly boosted user engagement and monetization. The launch of products like Opera One for iOS and the Opera GX gaming browser in the second quarter of 2024 accelerated the expansion of its user base, with Opera GX alone witnessing a surge of 500,000 new users, taking the total to an impressive 30 million monthly active users (MAUs), representing a 27% year-over-year increase.

Furthermore, OPRA’s future looks promising, buoyed by a robust partner base that includes heavy-hitters like Alphabet’s Google Cloud, Microsoft, and NVIDIA. Opera’s strategic partnership with Google Cloud led to the integration of cutting-edge Gemini models into the Aria browser AI, augmenting user experiences with advanced image generation and text-to-audio functionalities.

Moreover, Opera’s collaboration with Microsoft’s App Assure and Qualcomm Technologies to roll out an Arm-optimized version of its browser has turbocharged speed on Arm-based Windows systems, coupled with enhanced AI capabilities. The company’s new AI cluster in Keflavik, Iceland, powered by NVIDIA’s DGX SuperPOD with H100 Tensor Core GPUs, promises a quantum leap in AI capabilities, accelerating both training and inference by four and 30 times, respectively.

The Opera Crescendo: Positive Q3 Guidance

For the third quarter of 2024, Opera anticipates revenues in the range of $119-$121 million, signifying a 17% year-over-year upswing at the midpoint.

The Zacks Consensus Estimate for Opera’s third-quarter 2024 revenues comes in at $120.75 million, translating to a robust growth of 17.64% compared to the previous year, with earnings estimated at 23 cents, reflecting a steady 27.78% year-on-year increase.

Valuation: A Song of Undervaluation

Opera’s shares are currently undervalued, underscored by a Value Score of B. With a forward 12-month Price/Sales ratio of 3.05X, significantly lower than the industry average of 7.50X, Opera is poised for potential growth. Bolstered by a strong product portfolio and formidable partner base, Opera stands to leverage these strengths for robust product demand.

At present, Opera boasts a Zacks Rank #2 (Buy), signaling an opportune moment for investors to consider accumulating the stock as it charts its upward trajectory.