10 Cheap Internet Stocks to Buy According to Hedge Funds

7. Upwork Inc. (NASDAQ:UPWK)

Forward P/E: 12.92

Number of Hedge Fund Holders: 28

Upwork Inc. (NASDAQ:UPWK) operates an online working marketplace that connects professionals and agencies with businesses. Its marketplace offers are specialized for clients looking to hire. The company has a resilient and innovative platform and a strong business model that lends it a competitive advantage. It reported a record revenue of $191.5 million in fiscal Q4 2024, surpassing analyst estimates and reflecting a 4.1% year-over-year growth. Its adjusted diluted earnings per share (EPS) of $0.30 also surpassed the $0.25 forecast.

Upwork Inc. (NASDAQ:UPWK) reported a 12% year-over-year revenue growth in fiscal year 2024. 2024 marked the sixth consecutive year of double-digit growth outperformance for the company compared to the staffing industry. Management expects 2025 to be a year of accelerated execution around its focused portfolio of growth catalysts, AI, enterprise, and ads & monetization.

Engaging in AI remains a significant driver for Upwork Inc. (NASDAQ:UPWK). By employing AI in its platform, Upwork aims to enhance user experience, boost user engagement, and bolster its competitive market position. The company reported that the AI-related domain of GSV underwent a 60% year-over-year growth, reflecting future revenue growth potential.

Pernas Research stated the following regarding Upwork Inc. (NASDAQ:UPWK) in its Q3 2024 investor letter:

“Upwork Inc. (NASDAQ:UPWK) is a leading global platform in the online freelance marketplace, connecting businesses with independent professionals (freelancers) for collaboration. The stock has fallen by approximately 85% from its peak due to concerns over slowing growth and fears of AI disruption. However, our analysis suggests these concerns are overstated. The slowdown in growth is primarily due to temporary cyclical factors, while the long-term trend of businesses increasingly turning to skilled freelancers remains strong. Although market sentiment views Upwork’s business case as weakening, we see it as strengthening. We estimate a 70% upside potential from current levels, making Upwork a compelling long-term investment. Long form write-up here.”