10 Best Small Cap AI Stocks to Buy According to Short Sellers

6. Innodata Inc. (NASDAQ:INOD)

Market Cap as of August 26: $554.87 million

Number of Hedge Fund Holders: 6

Short % of Shares Outstanding as of July 31: 10.20%

Innodata Inc. (NASDAQ:INOD) is a global data engineering company that provides business processes, technology, and consulting services. It specializes in AI-powered products that help clients create, manage, use, and distribute digital information. It uses AI to extract valuable and organized insights from large datasets for data-driven decisions.

In the second quarter of this year, the company generated $32.55 million in revenue, which was higher than analyst estimates by $4.96 million, and up 66% year-over-year. However, the earnings per share were zero. The company’s PR CoPilot AI layer, integrated with the Agility platform, is delivering great business value. Despite being only 30% complete, its revenue surpassed $5 million.

The company has secured businesses with 2 major LLM development programs from a leading Big Tech customer. The programs are valued at about $44 million. This success builds upon existing programs and expansions with this customer, bringing the total account value to around $110.5 million.

It announced that there will soon be business with a major social media platform as a new customer for its GenAI solutions. There’s another deal with a clinical provider in the healthcare market, marking the first application of the Synodex platform in a clinical use case. There’s an additional contract with a federal government agency to provide news briefs and media monitoring using the Synodex platform’s new GenAI capabilities.

Due to strong organic growth, Innodata Inc. (NASDAQ:INOD) increased its full-year 2024 revenue guidance to 60% or more, up from the previously projected 40%. It’s trying to take on newer assignments actively with highly valuable Big Tech companies. Plans towards such gains and this serial deal making make INOD stock one of the best small-cap AI stocks.

This stock is held by 6 hedge funds, Renaissance Technologies being the largest one with a value of $7,100,456.