Straker enjoys share price rebound, aims to capitalise on AI boom

The STG share price rebound comes as investors anticipate positive times ahead for the AI narrative broadly
AI sector poised for rapid growth as new technologies scale
More businesses are using AI translation solutions to streamline workflows and drive productivity

Special Report: AI translation and localisation specialist Straker has enjoyed a strong resurgence in its share price this week, despite recently issuing financial guidance pointing to a 10% decline in revenue for 2025.

Straker (ASX:STG) specialises in the $70 billion translation and localisation industry and says it is well positioned to leverage generative AI to make these services more accessible and cost-effective for customers – a market that is expected to grow significantly over the next decade.

From a low of $0.37 on November 26, Straker shares leapt 70% to $0.63 on December 3.

This rise came, however, after the company informed the market it expects revenue to be in the order of 10% lower for the financial year ending March 31 2025 versus FY24.

Investors may be taking inspiration from the recent stellar share price rebounds of two other companies in Straker’s peer group – Appen (ASX:APX) and Ai-Media Technologies (ASX:AIM), which have both enjoyed an even sharper lift in market capitalisation.

Following extended falls, their share prices have risen 284% and 144% year to date respectively (as at the close of trading December 3, 2024) as investors looked through recent revenue growth and profitability declines to a future hitched to expected strong demand for generative AI related offerings.

Appen’s AI data platform supports data annotation, classification and human preference scoring to boost data quality, simplify data management and improve efficiency.

AI Media meanwhile provides AI-powered captioning technology and solutions in real time.

Investors seeing the big picture

Straker also offers AI-driven localisation, making content more relevant by contextualising it for specific markets, driving higher levels of engagement and conversion by resonating more effectively with the target market.

With AI technology constantly improving, the capacity to deliver such services at scale to customers around the world is growing rapidly, with the range of applications also expanding apace, particularly in the area of verification of machine translated content.

Boutique Sydney brokerage house Redleaf Securities, which services high-net worth and institutional clients, has been a strong supporter of Straker. Its founder John Athanasiou said the outlook for the sector is very promising and investors are looking forward, not backwards.

“The recent earnings downgrade stemmed from the non-renewal of two low-margin contracts with European Union institutions,” he noted, adding:

“However, once the market absorbed this news, attention shifted to Straker’s expanding suite of innovative solutions.

“These offerings position the company to secure new, higher-value business opportunities that are expected to more than offset the impact of losing these marginal contracts.”

Athanasiou said the stock represents a good buy at the current price.

“We see significant value in Straker Limited’s share price at current levels.

“It trades well below its all-time highs, appears undervalued compared to its peers, and remains under the radar for many investors seeking a profitable AI-focused business on the ASX.”

The AI offer in language translation is evolving rapidly

The increasing globalisation of businesses and their need to communicate effectively and efficiently across geographies is driving growth at the same time that new advancements in technological capabilities come online in the areas of machine learning and natural language processing.

This has dramatically improved the speed and accuracy of AI translations and has opened opportunities for companies like Straker to provide an additional level of quality assurance through verification services, which, in Strake’s case, can deliver human-quality expert translations when necessary.

Straker recently launched Verify, an AI content quality verification tool, which offers checks and enhancements along with the ability to forward content to human-language experts for final approval.

This product and others offer Straker’s customers a level of sophistication that appeals to Athanasiou.

“Straker Limited is a top pick for 2025, driven by our confidence in its expanding product suite and innovative solutions,” he emphasised.

“Notably, its Swiftbridge platform, developed on the IBM AI platform specifically for the Tokyo Stock Exchange, positions the company to secure significant new contracts.

“Straker’s cash flow positivity – an uncommon strength for a micro-cap of its size – further underscores its financial resilience.

“With the AI thematic expected to grow in prominence over the coming years, Straker is well positioned to capitalise on this transformative trend,” Athanasiou concluded.

This article was developed in collaboration with Straker Ltd, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.