Street Calls of the Week
BOSTON - Marketing platform Semrush (NYSE:SEMR), a digital marketing company with impressive gross profit margins of 81.43% and annual revenue growth of 22.16%, unveiled on Monday its AI Visibility Index, a new benchmark designed to measure brand performance across AI search platforms like ChatGPT and Google AI Mode. According to InvestingPro analysis, the company appears undervalued at its current market capitalization of $1.12 billion.
The index, based on analysis of 2,500 real-world prompts, aims to help marketers understand which brands are succeeding in AI search results and why. The tool comes as AI search is projected to surpass traditional search traffic by 2028, according to the company’s press release.
"AI search is likely the biggest shift in digital marketing since Google’s founding in 1998," said Andrew Warden, CMO of Semrush.
The index reveals that fewer than one in five brands are both frequently mentioned and consistently cited as authoritative sources in AI search results, highlighting what Semrush calls the "Mention-Source Divide." With a strong current ratio of 2.4 and more cash than debt on its balance sheet, Semrush demonstrates the financial stability to continue investing in innovative solutions. InvestingPro subscribers can access 10+ additional key financial metrics and insights about Semrush’s market position.
The benchmark also found that user-generated content significantly influences brand visibility in AI search, with different AI engines relying on different sources - ChatGPT draws heavily from Reddit while Google AI Mode favors established authorities like Bankrate and LinkedIn.
Semrush’s research indicates that effective strategies vary by industry, with the index covering five sectors: Finance, Digital Tech, Business & Professional Services, Fashion, and Consumer Electronics.
The company has made the AI Visibility Index publicly available at no cost, including an interactive microsite with data visualizations updated bi-weekly and a downloadable study with industry insights.
Semrush, headquartered in Boston with offices across the United States and Europe, offers online visibility management tools for businesses to run search engine optimization, advertising, and other digital marketing campaigns. While the company’s stock has faced volatility, analysts expect profitability this year. For detailed analysis and comprehensive insights, check out the in-depth Pro Research Report available on InvestingPro, part of their coverage of 1,400+ US equities.
In other recent news, SEMrush Holdings Inc. reported its second-quarter 2025 earnings, revealing a significant shortfall in earnings per share (EPS), with a reported EPS of -$0.04, missing the forecasted $0.08. Despite this, the company achieved a slight revenue beat, with revenue reaching $108.9 million, marking a 20% year-over-year increase. The company also trimmed its full-year revenue guidance by $6 million at the midpoint, which contributed to the reduction in its stock price targets by analysts. Needham lowered its price target for SEMrush to $12.00 from $18.00, maintaining a Buy rating. Similarly, KeyBanc reduced its price target to $12.00 from $16.00, while keeping an Overweight rating, due to SEMrush’s annual recurring revenue (ARR) missing estimates and a decline in paying customers. Morgan Stanley downgraded SEMrush from Overweight to Equalweight, reducing its price target to $9.00, citing growth concerns in the company’s downmarket segments. These developments reflect the challenges SEMrush faces as it shifts its focus towards enterprise and AI segments.
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