This AI narrative flip has delivered a 77% takeover windfall

The current market environment offers compelling near-term upside for stocks that successfully transition from the “AI loser” narrative to genuine “AI winner” status.

However, deep, industry-led research remains vital to avoid the many AI charlatans vying for investor dollars. Only companies with real-world proven AI and machine learning capabilities can sustain such a shift.

Adobe’s acquisition of Semrush (NYSE: SEMR) at a big premium is a powerful endorsement of Antipodes' long-held thesis that Semrush is indeed an underappreciated AI leader.

Before the takeover, Semrush traded at just 15x NTM P/E with ~20% underlying growth. 

We saw it as an asymmetric opportunity, backed by two powerful catalysts:

1. Misplaced negativity around search:

After conducting deep industry research, we formed the view that Semrush was being irrationally sold down on over-the-top expectations about the demise of traditional Google search.

Semrush is the leader in Search Engine Optimisation (SEO) software - the process of optimising website content to get more organic traffic without paying for ads.

People think Google search is shrinking and, thus, Semrush would be severely impaired.

However, after talking to global marketing executives and industry leaders, it became apparent that SEO traffic is incredibly cheap vs Google or Facebook ads, so even if organic traffic fell by 70% it would still make sense to prioritise SEO over paid advertising. Around 1% is spent on SEO vs search ads, yet organic clicks are 15x bigger traffic drivers vs paid clicks.

This created a persistent disconnect between valuation, and both industry dynamics and company fundamentals. The Semrush platform remained sticky, essential, and strategically central within its industry, despite the bearish market sentiment.

1. Real AI optionality:

Semrush has been one of the very first movers in AI-search optimisation.

Because large language models such as ChatGPT and Gemini rank content using signals that substantially overlap with Google’s traditional ranking factors, Semrush’s best-in-class web crawling, keyword, and content analysis tools give it a genuine head start in the race to optimise for AI-driven search.

We expected enterprises to continue paying for the core Google SEO suite, while layering on new AI-optimisation modules as marketers increasingly prioritise visibility in generative AI answers.

This was a classic free option on a very large new market that almost no sell-side analyst was modelling and provided the potential for a material repricing as the company became recognised as an AI winner.

Big premium reflects strategic value

Adobe will pay US$12.00 per share for Semrush, all-cash, making it an approximately US$1.9 billion transaction. This is a premium of around 77%. Deals of this nature typically fetch premiums of 20–40%.

While our base case anticipated very strong 3 to 5-year upside for Semrush, Adobe’s proposal delivers an exceptional outcome for shareholders and highlights the latent strategic value we identified through our research.

Semrush is a top 10 holding in the Antipodes Global SMID Active ETF (ASX: MIDS) and our decision to increase our Semrush position over recent months further enhances value capture for clients.

The transaction is expected to close in the first half of 2026, pending regulatory approvals and shareholder vote. 

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