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Analyzing the Surge: Wix Makes Epic Run Higher on AI-Fueled Momentum

Wix (WIX) - ★★★★ - Ranked #5 in our Q2 2024 SMID Equity Rankings

Shares of (WIX) are skyrocketing, up a staggering 39% year-to-date and over 116% in the last 12 months. The Israel-based website builder's stock has displayed powerful technical strength, trading above its 50-day, 100-day, and 200-day moving averages – classic buy signals for momentum investors as shown below.

The latest catalyst driving Wix higher was the company's blowout first quarter earnings report on Monday. Wix stock has surged nearly 25% this week after the company posted a surprise profit of $24 million, or 41 cents per share, compared to a loss of $10.4 million in Q1 2022. Adjusted for one-time items, earnings came in at $1.29 per share, easily topping analysts' expectations of $1.03.

Revenue growth was also impressive, with the top line jumping 12% year-over-year to $419.8 million and beating Wall Street's $417.9 million consensus estimate. The strong results have earned Wix a 4-star ranking on our platform, indicating we have a positive outlook on the stock currently.

Chart: TradingView

Looking ahead, Wix is forecasting a further boost to bookings in the second half of the year from its expanding suite of artificial intelligence products. On the earnings call, management highlighted that the company is gaining market share from agencies previously using open source platforms like WordPress as they migrate to Wix's offering.

A key growth driver is the new Wix Studio platform enabling professional web designers to build more sophisticated websites. With its innovative AI tools and increasing brand recognition, Wix appears well-positioned to capitalize on rising demand for website building solutions among businesses and individuals.

Wix is guiding for 26% free cash flow growth this year, demonstrating the operating leverage in its business model. After years of heavy investments, those expenditures are translating into accelerating profitability.

With the stock hitting new multi-year highs, investor enthusiasm is building around Wix's artificial intelligence capabilities and market share gains. While valuation is getting extended, the company's powerful earnings momentum could potentially justify further upside if Wix can sustain its torrid pace of growth.

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