Issue #104

Analyzing the "Fraud Brain" and "Data Pipeline" fueling the AI economy.

The next phase of the AI evolution is moving past the "chatbot era" and into the trenches of high-stakes, real-world utility. As we approach the end of Q1 2026, the market is no longer rewarding promises; it is rewarding the invisible infrastructure that makes global digital commerce possible and the data pipelines that feed the world’s most hungry models.

Winning in this environment requires looking beneath the surface at the companies providing the "trust" and the "fuel" for the modern economy.

This is where the AI conversation shifts from speculative hype to essential architecture—and where two distinct, high-growth winners have emerged.

👉 One company has become the AI-driven shield for the world's largest retailers, turning the "cost" of fraud into a guaranteed engine for revenue growth.

👉 The other is the silent architect of the data web, providing the massive, high-speed datasets that are quite literally the lifeblood of every major LLM in development today.

👉 Both are debt-free, hitting record revenue milestones, and sitting on the verge of massive institutional re-ratings.

In this edition, we break down the "Fraud Brain" and the "Data Pipeline" powering the 2026 AI economy—and why these two stocks are the most critical foundations for your portfolio as we close out the quarter.

Riskified (NYSE: RSKD)

Riskified (NYSE: RSKD) is a leading AI-powered fraud prevention and risk intelligence platform that enables global e-commerce merchants to safely grow their revenue. By leveraging machine learning and a vast network of cross-merchant data, Riskified provides real-time decisions on transactions, protecting businesses from chargebacks and policy abuse while ensuring a frictionless experience for legitimate customers.

Business Model and Revenue Streams 📦

Riskified’s business model centers on an "all-in-one" risk management platform that shifts the burden of fraud from the merchant to the AI. Unlike traditional providers that simply flag suspicious activity, Riskified offers a performance-based model where they provide a 100% guarantee on approved transactions. Their revenue is primarily generated through two segments:

• Chargeback Guarantee (Core Revenue): This is the company's primary engine. Riskified charges a percentage of every dollar of Gross Merchandise Volume (GMV) it approves. Because the company assumes the financial liability of any fraud that slips through, its incentives are perfectly aligned with the merchant’s growth.
• Expansion Products (Policy Protect & Account Secure): This higher-margin segment includes SaaS-based subscriptions for managing refund abuse, account takeovers, and dispute resolution. In 2025, these non-core products reached nearly $10 million in revenue, with management projecting growth to $15–$20 million in 2026.

Current macroeconomic policies, particularly fluctuating interest rates and trade tariffs, impact Riskified by influencing global consumer spending. While a slowdown in luxury fashion affected some growth in 2025, the company has successfully diversified into the travel and money transfer sectors—verticals that grew by 90% year-over-year. Additionally, currency headwinds (specifically the Israeli Shekel and Euro) are a factor to watch, as they are expected to create a 400 basis point headwind on Adjusted EBITDA in 2026.

Recent Performance and Corporate Developments 📈

Riskified delivered a landmark performance in its most recent report for the fourth quarter and full year of 2025, hitting a major milestone in its corporate history.

Q4 2025 Financial Highlights: 💰

• Total Revenue: The company reported record quarterly revenue of $99.3 million, a 6% increase year-over-year, beating the Zacks consensus estimate.
• First GAAP Profitability: Riskified achieved its first-ever quarter of GAAP profitability in Q4 2025, posting a net profit of $5.8 million ($0.04 per share).
• Gross Margin Expansion: GAAP gross profit margin reached 57% in Q4, up significantly from 52% in the prior year, driven by enhanced AI model performance.
• Annual Growth: For the full year 2025, revenue reached $344.6 million, and Gross Merchandise Volume (GMV) climbed 18% to $155.1 billion.

Strategic Initiatives and Mergers: 🤝

While there have been no recent major mergers, Riskified has focused on aggressive ecosystem expansion. On March 9, 2026, the company announced a major partnership with Radial to power fraud protection for their global merchant portfolio. Furthermore, the company expanded its "AI Agent Intelligence" platform to secure native AI shopping assistants, positioning itself as a leader in the next era of "agentic commerce." To support shareholder value, the Board authorized an additional $75 million share repurchase program in March 2026, following the exhaustion of nearly $300 million in previous buybacks.

Profitability and Fair Value 🎯

Riskified has successfully pivoted from a high-growth "burn" phase to a profitable, capital-efficient machine. The company's path to 2026 is defined by:

• Operating Leverage: By maintaining a disciplined expense structure while scaling GMV, Riskified is seeing massive improvements in Adjusted EBITDA, which reached $17.7 million in Q4 2025—surpassing its entire 2024 total in just one quarter.
• Cash Position: The company holds $297.6 million in cash and zero debt, providing a massive safety net and the ability to self-fund its $75 million buyback program.

In terms of fair value, the stock is currently seen as a "turnaround" play. While the price has faced pressure due to broader software sector volatility, its current valuation at approximately 2.2x price-to-sales is considered attractive compared to its 9%–11% revenue growth forecast and high free cash flow yield (estimated at 10% for 2026).

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus rating among analysts is a "Buy." Over the last 30 days, following the record Q4 earnings, the stock has seen a surge in positive sentiment.
• Price Target: The average 12-month price target is approximately $6.17, with some bullish analysts setting targets as high as $7.00. This suggests a potential upside of over 35% from recent trading levels near $4.50.

Investor-Focused Takeaway: Is RSKD Right for Your Portfolio?

Riskified offers a unique "picks and shovels" play on the AI revolution. Rather than just building chatbots, it uses AI to solve a multi-billion dollar problem: e-commerce fraud. With its first GAAP profit now in the books and a massive share buyback in progress, the company has moved from speculative to a fundamental-driven growth story.

What to Watch in the Near Term: 📈

• Q1 2026 Earnings (May 13, 2026): Watch for continued momentum in the Money Transfer vertical and progress on the $15–$20 million revenue target for non-core products.
• FX Volatility: Monitor the Israeli Shekel and Euro, as management has noted these as the primary risks to their 2026 margin outlook.

Recommendation:

Riskified (RSKD) is a compelling "Buy" for investors seeking exposure to AI-driven financial software. The company’s move into GAAP profitability, combined with a strong balance sheet and aggressive buybacks, makes it a standout candidate for a Q1 2026 trade.

Alarum Technologies (NASDAQ: ALAR)

Alarum Technologies (NASDAQ: ALAR) is a global provider of web data collection and internet access solutions that serves as a critical infrastructure layer for the artificial intelligence industry. Through its primary subsidiary, NetNut, the company provides a high-speed hybrid proxy network that allows enterprise clients and AI labs to collect vast amounts of public web data anonymously and securely. This data is the lifeblood of Large Language Models (LLMs), making Alarum a "behind-the-scenes" powerhouse in the generative AI era.

Business Model and Revenue Streams 📦

Alarum’s business model is centered on the monetization of its proprietary Global Proxy Network. Rather than selling hardware, the company provides a sophisticated software-based gateway to the internet. Its revenue is primarily generated through two high-demand channels:

• Web Data Collection (NetNut): This is Alarum’s primary growth driver. Customers, including global e-commerce platforms and AI developers, pay for access to NetNut’s network to scrape and gather massive datasets used for training AI models, market research, and price monitoring. Revenue is typically based on data usage volume or subscription tiers, creating a scalable "toll-booth" model.
• Cybersecurity and Privacy Solutions: Though a smaller portion of the business compared to its data wing, Alarum maintains a suite of privacy-focused products that offer secure browsing and IP protection for businesses, adding a layer of recurring SaaS-style revenue.

Macroeconomic conditions in 2026, particularly the race for "AI Sovereignty," have acted as a tailwind for Alarum. While high interest rates generally pressure small-cap tech, the inelastic demand for high-quality training data has shielded the company. However, geopolitical tensions and data privacy regulations remain factors to monitor, as they can influence the flow of cross-border data traffic, which is central to Alarum’s global proxy network.

Recent Performance and Corporate Developments 📈

Alarum has transitioned from an emerging player to a record-breaking performer, specifically fueled by the explosion in demand from AI labs.

Q3 2025 Financial Highlights: 💰

• Record Revenue: Alarum reported Q3 2025 revenue of $13.0 million, a massive 81% increase year-over-year. This represented 48% sequential growth from the previous quarter.
• Operational Expansion: The company saw a 26% increase in paying customers and a 17% rise in average revenue per customer (ARPC), indicating that existing clients are significantly increasing their data consumption.
• Profitability Milestones: The company achieved an Adjusted EBITDA of $1.2 million for the quarter. While gross margins dipped to 55.6% (from 71.8% in 2024), management clarified this was a strategic move to "front-load" infrastructure and capacity to capture market share in the AI training segment.

Strategic Initiatives and Mergers: 🤝

There have been no major mergers in early 2026, as the company is focused on organic scaling. A pivotal development is the scheduled release of Q4 and Full Year 2025 results on March 19, 2026. Management has provided guidance for Q4 revenue of approximately $12 million, which would represent a 63% increase year-over-year. This structured communication highlights a shift toward more predictable, enterprise-grade reporting as they target larger institutional investors.

Profitability and Fair Value 🎯

Alarum is currently in a "land-grab" phase, prioritizing market share over maximum short-term margins. Despite this, the company remains financially healthy:

• Cash Surplus: As of late 2025, Alarum held $24.6 million in cash and investments with zero debt, a rare feat for a small-cap AI growth company.
• Valuation: The stock has been described by some analysts as significantly undervalued. With an intrinsic value estimated by some models at $14.00, and a current trading price hovering around $6.50–$7.00, there is a perceived valuation gap of over 50%.

The market's primary concern has been the temporary compression of gross margins. However, if Alarum demonstrates margin expansion in its upcoming March 19th report as infrastructure costs stabilize, it could serve as a major catalyst for a price re-rating.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus among covering analysts is a "Strong Buy."
• Price Target: Canaccord Genuity has been particularly bullish, reiterating a $27.00 price target, which suggests a massive potential upside from current levels.
• Institutional Sentiment: While analyst coverage is currently specialized, the 800% EPS surprise in Q3 2025 has put the stock on the radar of broader tech funds looking for "hidden gem" AI infrastructure plays.

Investor-Focused Takeaway: Is ALAR Right for Your Portfolio?

Alarum Technologies is a high-conviction play for those who believe that the demand for AI training data will only accelerate. It is essentially a "utility" for AI labs; as long as companies are building models, they need the data that Alarum's network provides.

What to Watch in the Near Term: 📈

• Earnings Call (March 19, 2026): This is the most critical near-term event. Investors will be looking for confirmation that the "front-loaded" investments are leading to sustained revenue growth and margin recovery.
• Customer Concentration: Watch for updates on the "major global e-commerce platform in Asia" and other large-scale AI customers, as these key accounts drive the bulk of sequential growth.

Recommendation:

Alarum (ALAR) is a high-reward trade for the end of Q1 2026. The combination of record revenue growth, a debt-free balance sheet, and a massive disconnect between its current price and analyst targets makes it one of the most intriguing small-cap AI stocks on the NASDAQ.

Final Take: The Fraud Shield and the Data Pipeline Powering AI

The AI revolution has moved beyond the laboratory and into the transaction layer. Success in this market now requires two critical components: software that secures global commerce and the infrastructure that feeds the world's most advanced models. This is where Riskified (RSKD) and Alarum Technologies (ALAR) stand apart as we close out Q1 2026.

🛡️ Riskified (RSKD) — The Intelligence Shield for Global Commerce

• First GAAP Profitability: Transitioned from a growth story to a sustainable, profitable machine in Q4 2025.
• Massive Capital Returns: Backed by a $75 million buyback program and a debt-free balance sheet.
• The AI "Trust" Factor: Leverages deep machine learning to turn fraud prevention into a revenue-generating asset for merchants.
• ➤ Best for: Investors seeking a profitable, mid-cap AI "fintech" play with significant margin expansion and lower downside risk.

🚀 Alarum Technologies (ALAR) — The Data Engine Behind Every AI Model

• Explosive Top-Line Growth: Delivering 80%+ year-over-year revenue increases fueled by the global race for AI training data.
• Critical Infrastructure: NetNut’s proxy network is the "toll booth" for the massive public datasets required to train LLMs.
• Deep Value Disconnect: Trading at a significant discount to analyst price targets (up to $27.00) despite record-breaking performance.
• ➤ Best for: High-conviction investors looking for a "hidden gem" infrastructure play with massive upside potential as AI scaling continues.

Investor Insight

🧩 Want AI-driven security, recurring revenue, and consistent buybacks? → RSKD

⚙️ Want raw AI infrastructure exposure with explosive revenue growth? → ALAR

Bottom Line:

Artificial intelligence doesn’t scale on algorithms alone—it scales on transactional trust and data accessibility. Riskified provides the brain that secures the global economy, while Alarum supplies the pipeline that makes intelligence possible. As AI spending shifts from testing to 24/7 deployment, RSKD and ALAR aren't just speculative trades—they are the foundational building blocks of the 2026 AI economy.

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Happy Trading
​— Team Premium Stock Alerts