Why Opera Limited Rallied Today
Shares of internet browser company Opera Limited (NASDAQ: OPRA) rallied on Tuesday, rising 5.5% during the day's session.
Opera is a unique tech software company spending big on artificial intelligence (AI) that actually trades at a bargain valuation of just 8.6 times earnings.
While Opera reported relatively solid results last quarter, the stock ultimately fell on the back of hefty spending for its new AI data center cluster, which greatly increased the company's capital expenditures. However, the stock appears to be rising on the back of different artificial intelligence-related news today.
Google's Gemini is coming to Opera
In a press release this morning, Opera announced a new collaboration with Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Cloud division. The collaboration will see Opera incorporate Google's new Gemini large language model (LLM) into its new Aria AI browser.
Aria is a multi-LLM composer engine that aims to use the best LLM for a particular user and task. Given that Aria's usefulness would hinge on the depth and breadth of the LLMs it offers, getting Google's Gemini is a big deal. While the initial rollout of Gemini definitely had a few hiccups, Google has tremendous financial and technical resources, and is after all the company where many of today's AI technologies were invented. So it's thought that Gemini will become a leading LLM player in the future.
In particular, Aria said it would be rolling out a free text-to-image feature and a text-to-audio response feature powered by Gemini to start for all its users.
Per Wetterdal, an executive vice president at Opera, said in the release: "Our companies have been cooperating for more than 20 years. We are excited to be announcing the deepening of this collaboration into the field of generative AI to further power our suite of browser AI services."
Opera looks like an interesting AI value stock
Of note, Opera actually competes with Google's Chrome browser, but the two companies are still collaborating for what each likely sees as a win-win scenario. After all, Opera has 304 monthly active users for its browsers, and has found particular favor with tech-savvy gamers. So, it's no wonder that Alphabet would see Opera's user base as a potential incremental audience for Gemini.
While Opera investors appeared to grow nervous about its AI spending last quarter, it's likely better that the company lean into the AI revolution rather than shy away and risk falling behind. At this bargain valuation, Opera looks like a buy.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Billy Duberstein and/or his clients have positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
