This small-cap growth stock has been hit hard by the rise of artificial intelligence. But it could grow into a Vibe Coding Giant.

• The rise of vibe coding has displaced the need for certain software.

• Smart marketing has benefited this company’s core business, allowing it to benefit from scale.

• The stock is currently trading at very low earnings levels due to fears of AI disruption.

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Artificial intelligence has the power to disrupt many industries. Software companies in particular have seen investors turn against them, as powerful AI tools like Anthropic’s Claude Code threaten to make many other software solutions obsolete.

One company that has seen its shares plummet because of that fear is Wix (NASDAQ:WIX)the leading software-as-a-service (SaaS) solution for website builders. But as the saying goes, “If you can’t beat ’em, join ’em.” Wix has made several AI-powered improvements to its products in recent years, and a major acquisition could push the company into entirely new territory based on vibe coding or AI-powered programming. And investors can now buy the shares cheaply.

Wix started in the mid-2000s helping individuals and small businesses set up simple websites. It became the largest SaaS website builder thanks to its marketing skills. The ability to scale the software business more than offsets the additional costs of marketing, especially if the company maintains high net retention rates (and it does).

The company introduced more powerful tools for website makers in 2023, called Wix Studio, aimed at agencies and freelancers building websites for businesses. That has led to strong growth in Wix’s partners segment, which rose 24% year over year last quarter. Partners are also a driving force behind the adoption of business solutions, including payments.

The next evolution for Wix is ​​the move to vibe coding for websites and apps. Vibe coding is the practice of using an AI agent to generate code based on natural language cues. Last June, Wix acquired Base44, an AI company specializing in vibe coding apps. The company quickly deployed its marketing expertise and grew the number of active users more than sevenfold, to two million in November.

Wix incurs high operating and scaling costs for its AI service. However, the addressable market is enormous and expands the company’s activities beyond just simple websites. If it can execute on its playbook, it should see strong revenue growth, and operating margins should rise over the long term as it offers more high-end services.

While Claude Code and other AI agents pose a challenge to Wix, the company has a proven track record of capturing significant market share in major markets through strong marketing performance and customer retention. We’re already seeing this happening in the professional website design market, and it could be repeated in the app development market, which is about to explode with advances in vibe coding.