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Semrush Holdings, Inc. (SEMR): A Bull Case Theory

By Ricardo Pillai | July 24, 2025, 10:04 AM

We came across a bullish thesis on Semrush Holdings, Inc. on P14 Capital’s Substack. In this article, we will summarize the bulls’ thesis on SEMR. Semrush Holdings, Inc.'s share was trading at $8.91 as of July 18th. SEMR’s trailing  P/E was 148.50 according to Yahoo Finance.

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Highlighting the company's sector and industry, a technician working on a complex SaaS in a technology lab.

Semrush, Inc. (SEMR) has been weighed down by investor pessimism toward SaaS and fears that generative AI will render traditional search obsolete, leaving the stock ~20% below its IPO close. Yet this has created a contrarian opportunity. SEMR, a founder-led SaaS leader in SEO and digital marketing, serves 1.12M users across 153 countries, with ~118K paying customers and best-in-class 82–83% gross margins. Revenue grew 22.8% Y/Y to $396M in the latest LTM period, with non-GAAP operating income up 73% and FCF up 142%.

Market concerns around AI disruption are overblown; organic search still accounts for 53% of trackable traffic, and Google’s AI Overviews have plateaued at ~20% of queries. Rather than eroding SEMR’s model, AI is creating new opportunities: its AI Toolkit hit ~$4M ARR within three months of launch, and Enterprise AIO, its flagship AI search visibility tool, is gaining traction.

SEMR’s enterprise pivot is accelerating, with ARR per enterprise customer averaging $55K—~15x the company-wide average—and Enterprise SEO alone projected to reach $30M ARR by Q4 2025. This efficient bottom-up PLG motion drives operating leverage, margin expansion, and rising FCF.

At just 2.7x EV/LTM sales, SEMR trades at a deep discount to peers, despite a guided 20% CAGR through FY27. A rerating to 4x FY26E EV/Sales implies 83% upside, with further multiple expansion or a PE buyout offering additional optionality. Even if AI search accelerates, SEMR’s data scale and evolving platform make it structurally essential, offering a favorable risk/reward profile with limited downside and significant upside catalysts.

Previously, we covered a bullish thesis on Similarweb Ltd. (SMWB) by 1rabbitresearch in November 2024, which highlighted its leadership in web analytics, unique data assets, and improving profitability driven by renewed demand. The company’s stock price has remained relatively stable since our coverage as the thesis has yet to play out. The thesis still stands as digital insights remain critical. P14 Capital shares a similar view on Semrush Holdings, Inc. (SEMR) but emphasizes its enterprise pivot, AI-led product expansion, and contrarian stance against fears of SEO obsolescence.

Semrush Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held SEMR at the end of the first quarter which was 27 in the previous quarter. While we acknowledge the potential of SEMR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. 

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