Depending on who you ask, artificial intelligence (AI) will have a profoundly positive or negative impact on society. For example, investor Warren Buffett has likened AI to the creation of the atomic bomb, while Cathie Wood expects it to quadruple the productivity of knowledge workers by the end of the decade.
The most frustrating thing about predicting the future of AI is that Buffett and Wood could both be correct. The only thing we can be sure of is that, like most technological advancements, workers with experience using all the new AI-powered tools will be in high demand.
Luckily, there's a way for everyday investors to bet on the continued expansion of employment opportunities for workers with AI-related experience. It's called Fiverr (FVRR -2.00%), and in case you aren't already familiar with it, it's already the most popular place on the internet to find tech-savvy freelancers.
AI is already a big growth driver
For months, hardly a week has gone by without a major layoff announcement from a large tech company. While tech companies have been cutting new employees loose, nontech businesses are still hiring tech-savvy freelance workers. Fiverr's first-quarter revenue rose 1.5% year over year despite widespread fear of a global recession.
The recent proliferation of generative AI services such as ChatGPT from OpenAI has already been a huge positive for Fiverr. During the company's latest earnings call, CEO Micha Kaufman said the AI business has boomed over the past six months, with the number of AI-related gigs rising 900% and buyer searches for AI-experienced workers increasing at an even faster rate.
An easy prediction
After starting a multiyear partnership with OpenAI worth an estimated $10 billion, Microsoft appears to have the upper hand in the generative AI market. That said, Alphabet started transitioning from a mobile-first business to an AI-first business way back in 2016, and it has a lot of resources to work with.
It's too early to know which generative AI service will become the most popular, but this hardly matters to Fiverr investors. At the end of the day, all AI services produce results based on existing content created by humans, and that content is rarely flawless.
Jobs verifying and editing AI-generated content are flourishing on Fiverr's platform now. Given the inherently derivative nature of AI-generated content, this seems like a trend you can rely on for many years to come.
A bargain now
Fiverr's revenue as a percentage of total payments processed on the platform, a metric it calls take-rate, swelled to 30.4% in the first quarter. This might make you think twice about hiring a freelancer through the platform, but buyers obviously find the service valuable enough to keep coming back for more.
Despite a challenging macroeconomic environment, the number of businesses and individuals actively buying services on Fiverr's platform at the end of March was slightly higher than a year earlier. In addition to more buyers overall, the average buyer spent 4% more year over year.
The past 12 months have been more challenging than usual, but Fiverr kept moving toward profitability. Its first-quarter net loss, according to generally accepted accounting principles (GAAP), shrank to $0.11 per share from a loss of $0.46 per share a year earlier.
Right now, you can buy shares of Fiverr for just 18.9 times forward-looking earnings estimates. This is just slightly more expensive than the average stock in the benchmark S&P 500 index, which currently trades at 18.5 times estimates.
With a business positioned to grow along with the popularity of AI-related applications in general, Fiverr's likely to grow its bottom line faster than the average stock in any benchmark index. Buying now and holding for the long run looks like the right move.
