Key Takeaways:
- Wix, a leading software-as-a-service (SaaS) solution for website builders, has seen its stock plummet due to fears of AI disruption.
- The company has made AI-powered enhancements to its products and recently acquired Base44, an AI company specializing in vibe coding apps.
- Wix is expanding its operations beyond simple websites into vibe coding for websites and apps, with a massive addressable market.
- The company’s stock is currently undervalued, trading at 13 times forward earnings expectations.
- Wix has a proven track record of executing its playbook and carving out significant market share in large markets.
Introduction to Wix and AI Disruption
Artificial intelligence has the power to disrupt many industries, and software companies are no exception. As AI tools like Anthropic’s Claude Code gain popularity, investors have turned against software companies, fearing that these tools will render many other software solutions unnecessary. Wix, a leading SaaS solution for website builders, has been one of the companies affected by this trend. However, as the saying goes, "If you can’t beat ’em, join ’em." Wix has made several AI-powered enhancements to its products over the last few years, and a major acquisition could push it into entirely new territory.
Moving Beyond Simple Websites
Wix got its start in the mid-2000s helping individuals and small businesses set up simple websites. It became the largest SaaS website builder thanks to its marketing prowess. As the company’s CEO notes, "Our ability to scale the software business more than offsets the added cost of marketing, especially if we maintain high net retention rates." Wix introduced more powerful tools for website creators, called Wix Studio, in 2023, targeting agencies and freelancers who build websites for businesses. This move has driven strong growth in Wix’s partners segment, which climbed 24% year over year last quarter. Partners are also a driving force behind the adoption of business solutions, including payments.
The Acquisition of Base44 and Vibe Coding
The next evolution for Wix is its push into vibe coding for websites and apps. Vibe coding is the practice of using an AI agent to generate code from natural-language prompts. Last June, Wix acquired Base44, an AI company specializing in vibe coding apps. As Wix’s management noted, "We quickly put our marketing expertise to work and successfully grew active users more than sevenfold to 2 million by November." This acquisition has given Wix a significant foothold in the vibe coding market, and the company is well-positioned to take advantage of the growing demand for AI-powered app development.
Growth Opportunities and Challenges
Wix is incurring high operating and scaling costs for the AI service, but the addressable market is massive, and it expands the company’s operations beyond simple websites. As one analyst noted, "If Wix can execute its playbook, it should see strong revenue growth, and its operating margin should rise over the long run as it offers more high-end services." While Claude Code and other AI agents pose a challenge for Wix, the company has a proven track record of carving out significant market share in large markets through strong marketing performance and customer retention. We’re already seeing that play out in the professional website design market, and it could repeat itself in the app development market, which is set to explode with advancements in vibe coding.
Valuation and Investment Opportunity
What makes the opportunity even more attractive is Wix’s stock price. At just 13 times forward earnings expectations, the stock is an absolute bargain. As one investor noted, "Wix has a proven track record of executing its playbook and carving out significant market share in large markets. With its recent acquisition of Base44 and its push into vibe coding, the company is well-positioned for long-term growth and success." With its low valuation and significant growth opportunities, Wix is a smart buy for investors looking to capitalize on the AI revolution. As the company continues to execute its strategy and expand its operations, its stock price is likely to rise, making it a compelling investment opportunity for those who get in early.
https://www.fool.com/investing/2026/01/24/this-small-cap-growth-stock-has-been-hit-hard-by-t/