Umesh Sachdev, the CEO of Uniphore, recently appeared on CNBC on March 19 to talk about what he calls the ‘the third year of a ten-year AI buildout’. Sachdev shared his perspective on the GPU Technology Conference (GTC) conference during this conversation. GTC is a global AI-focused event held semi-annually that brings together developers, engineers, researchers, and IT professionals to explore advancements in AI, ML, computer graphics, and autonomous machines. Sachdev attended both Jensen Huang’s keynote and spoke on a panel afterward. He highlighted several announcements that caught his attention. These included the Vera Rubin chips and the next-generation Blackwell Ultra chips, which were expected advancements in computing power.
However, what stood out most to him was Huang’s discussion around Agentic AI and physical AI. He explained that AI agents are becoming smarter and beginning to reason. This development is significant for customers like insurance companies, banks, telecom companies, and manufacturing firms. Sachdev noted that AI agents are already assisting employees or replacing certain jobs within these companies, and are performing tasks faster and more efficiently. Similarly, physical AI robots are being implemented in manufacturing setups with guardrails, which showcases early applications of these technologies. He believes these advancements will lead to what he calls an age of abundance, which will ultimately improve free cash flow for many publicly traded companies and create a bright future for AI in the enterprise.
As AI continues transforming industries and the way businesses operate, we’re here with a list of the 10 most popular AI penny stocks to buy under $5.
Phone with stocks chart
Methodology
We sifted through financial media reports and stock screeners to compile a list of the top AI penny stocks that were trading under $5 as of March 24. We then selected the 10 AI stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Popular AI Penny Stocks to Buy Under $5
10. Firefly Neuroscience Inc. (NASDAQ:AIFF)
Share Price as of March 24: $4.95
Number of Hedge Fund Holders: 2
Firefly Neuroscience Inc. (NASDAQ:AIFF) uses AI to develop neuroscientific solutions, specifically through its Brain Network Analytics (BNA) software. This technology aims to improve diagnosis and treatment for patients with mental illnesses and neurological disorders, such as depression, dementia, and ADHD. It serves both pharmaceutical companies and medical practitioners.
The BNA platform uses EEG data to analyze brain activity. The company is developing a “brain age” biomarker using BNA, which will potentially enable early Alzheimer’s screening. The company is also using BNA to provide objective measures of drug efficacy and cognitive change in clinical trials and neuropsychiatric care.
A key initiative at Firefly Neuroscience Inc. (NASDAQ:AIFF) is the development of the world’s first foundation model of the human brain, built using BNA data. The company’s acceptance into the NVIDIA Connect program provides access to advanced AI development resources for this project. Studies have demonstrated BNA’s utility in assessing drug effects, like Novartis’ MIJ821, and its potential as a cognitive biomarker in Major Depressive Disorder (MDD) treatment.
9. POET Technologies Inc. (NASDAQ:POET)
Share Price as of March 24: $4.07
Number of Hedge Fund Holders: 4
POET Technologies Inc. (NASDAQ:POET) uses advanced wafer-level semiconductor manufacturing and its proprietary POET Optical Interposer platform to develop integrated optoelectronic solutions. It focuses on AI-driven data processing and high-speed data transmission and provides photonic integrated components for data centers, telecommunications, and markets like automotive LIDAR and medical imaging.
The POET Optical Interposer technology is designed to power AI hardware and data centers, which offers cost savings, power efficiency, and high performance. The company is developing optical engines for 400G and 800G applications, which are crucial for pluggable transceivers used in AI. The company also has an agreement to develop optical engines for high-frequency trading (HFT), which will generate revenue this year.
POET Technologies Inc. (NASDAQ:POET) has received several industry awards for its AI hardware technology. The company has shipped samples of its POET Infinity transmit product line for 400G and 800G applications to 3 global technology customers. This will convert electrical signals to optical signals for high-speed data transmission in AI and data center networks. The demand for these is forecasted to be about 20 million units per year for the next 5 years. Production orders are expected in H2 2025.
8. Richtech Robotics Inc. (NASDAQ:RR)
Share Price as of March 24: $2.26
Number of Hedge Fund Holders: 4
Richtech Robotics Inc. (NASDAQ:RR) develops and deploys AI-driven robotic solutions for service industry automation. It offers a range of robots like Matradee, Medbot, and DUST-E for delivery, sanitation, and food service. With increasing AI integration, these robots aim to optimize efficiency and customer experience in environments such as restaurants, hotels, hospitals, and retail centers.
The company’s ADAM robot barista is powered by NVIDIA AI and interacts with customers. It takes verbal orders and prepares beverages. This technology is featured in the company’s brand, called Coffee & Tea, which launched its first location in Las Vegas. Richtech Robotics Inc. (NASDAQ:RR) also showcased other AI-powered service robots, like Scorpion, recently at CES.
To further AI and robotics research, the company launched the Richtech Accelerator Program. This program provides US universities with access to the company’s robotic systems to improve AI models. Columbia University is the first partner, which focuses on Natural Language Processing for human-robot interaction. Richtech Robotics Inc.’s (NASDAQ:RR) strategy includes launching new brands that use its AI technology and investing in research programs to advance AI development.
7. Rekor Systems Inc. (NASDAQ:REKR)
Share Price as of March 24: $1.00
Number of Hedge Fund Holders: 5
Rekor Systems Inc. (NASDAQ:REKR) is a technology company that specializes in AI-driven infrastructure solutions for transportation, public safety, and urban mobility. It offers platforms like Rekor One and Rekor Scout for roadway intelligence and incident response. It uses AI for vehicle and license plate recognition.
The company’s AI-powered urban mobility platform, called Discover, is seeing rapid adoption. Florida has approved Discover for statewide deployments. New York has advanced it to procurement and granted access to 115,000 miles of roadways. New Mexico is investing $200 million in a project using the company’s AI. The company is engaged with over a dozen states and manages 1.2 million miles of roadways.
The company’s AI technology is positioned to transform 4.2 million miles of US roadways. Rekor Systems Inc. (NASDAQ:REKR) anticipates a potential 40% CAGR in revenue within the next five years, driven by its AI solutions. The company’s Q3 2024 revenue reached $10.5 million for the same reasons, which was a 16% increase. Recurring revenue was $5.5 million, which was up 14%.
6. Veritone Inc. (NASDAQ:VERI)
Share Price as of March 24: $2.76
Number of Hedge Fund Holders: 5
Veritone Inc. (NASDAQ:VERI) provides AI computing solutions and services globally. It is centered around its aiWARE platform, which is an AI operating system that transforms unstructured data into actionable insights through ML. It also offers media advertising agency services, that encompass planning, buying, and analytics.
The company’s aiWARE platform handled over 10 petabytes of data in 2024. The newly launched Veritone Data Refinery (VDR) has a $5 million near-term sales pipeline and already generated $0.7 million in Q4 2024 revenue. VDR enables organizations to transform unstructured data, such as video, audio, and text, into high-quality assets for training advanced AI models. Its Intelligent Digital Evidence Management System (IDEMS) is an AI-powered platform for aggregating, analyzing, and sharing digital evidence, and is a key AI application for the public sector. Its pipeline exceeds $110 million, and 18 new public sector customers were added in Q4.
The company anticipates 100% to 150% growth in its public sector business. Veritone Inc. (NASDAQ:VERI) also secured awardable status on the Department of Defense TradeWinds marketplace for three AI solutions recently. In the commercial sector, it secured 42 new deals in Q4, which includes a renewed partnership with CBS News.
5. Nerdy Inc. (NYSE:NRDY)
Share Price as of March 24: $1.58
Number of Hedge Fund Holders: 7
Nerdy Inc. (NYSE:NRDY) operates an AI-driven live online learning platform. It connects learners of all ages with tutors and educators across various subjects. Using AI to personalize learning experiences, the platform offers one-on-one instruction, group tutoring, and self-study tools through Varsity Tutors and Varsity Tutors for Schools.
In the company’s Varsity Tutors segment, one of the key AI initiatives includes the AI Session Playback tool, which summarizes tutoring sessions and has received a 99% positive feedback rate. AI lesson and practice problem generators are also in use, and Tutor Copilot provides real-time instructional support. Future AI developments include upgrading the AI tutor for on-demand support and refining the expert-learner matching algorithm.
Nerdy Inc. (NYSE:NRDY) has already reduced its corporate headcount by 15% through AI-enabled productivity initiatives during Q1 2025, which resulted in $6 million in annualized cash savings. The company anticipates scaling without significant new hiring due to AI automation. In Q4 2024, the company’s revenue was $48 million. 82% of this came from the Consumer Learning Membership revenue. For Q1 2025, revenue is projected between $45 and $47 million.
4. Perfect Corp. (NYSE:PERF)
Share Price as of March 24: $1.93
Number of Hedge Fund Holders: 9
Perfect Corp. (NYSE:PERF) is an AI SaaS company that specializes in AR and AI solutions for the beauty, fashion, and skincare industries globally. It offers AI and AR-powered tools for virtual try-ons, skin diagnostics, and image editing. It provides licensing and cloud-based solutions to brand owners and individual consumers.
The company’s AI-powered solutions encompass both its B2C mobile app subscriptions and B2B AI/AR cloud services. In the B2C sector, AI is central to photo and video editing features, with GenAI tools like AI hairstyle transformations and face swaps driving user engagement. The company’s mobile app subscriber base reached over 1 million by the end of 2024, which was a 14.3% year-over-year increase.
For B2B clients, Perfect Corp. (NYSE:PERF) offers AI-powered skin diagnostics and virtual try-on technologies. AI skin analysis detects 15 major skin concerns, which enables personalized product recommendations. The company has reached 732 brand clients with over 822,000 skills onboarded. The company reported a 12.5% revenue increase for 2024. AI/AR cloud solution and subscription revenue grew by 25.4% in Q4. It projects 2025 revenue growth between 13% and 14.5%.
3. BigBear.ai Holdings Inc. (NYSE:BBAI)
Share Price as of March 24: $2.97
Number of Hedge Fund Holders: 13
BigBear.ai Holdings Inc. (NYSE:BBAI) delivers AI-powered decision intelligence solutions. It offers services in national security, supply chain management, and digital identity through advanced data analytics and ML. The company’s AI platforms process and visualize complex data, and enable predictive insights for sectors like defense, logistics, and transportation.
The company has a strong focus on government contracts. The company’s work with the US Department of Defense (DoD) is a key revenue driver. The company recently secured a 3.5-year, $13.2 million sole-source contract to support the DoD’s ORION Decision Support Platform (DSP). This platform provides automated force management and data analytics that uses BigBear.ai Holdings Inc.’s (NYSE:BBAI) AI capabilities. The company also reported that increased revenue from the Department of Homeland Security and Digital Identity awards contributed to its growth.
In Q4 2024, BigBear.ai Holdings Inc. (NYSE:BBAI) reported revenue of $43.8 million, which was an 8% increase year-over-year. For FY2025, the company projects revenue between $160 and $180 million. It’s focused on the AI sector, particularly in serving the government, and is actively using the DoD’s Tradewinds Marketplace to secure AI/ML procurement contracts.
2. Lantronix Inc. (NASDAQ:LTRX)
Share Price as of March 24: $2.71
Number of Hedge Fund Holders: 17
Lantronix Inc. (NASDAQ:LTRX) develops and markets industrial and enterprise IoT products and services globally. It specializes in embedded IoT solutions that use AI and ML for data analysis and processing. It provides IoT compute products, wired and wireless connectivity solutions, and a SaaS platform for deploying and managing IoT devices.
The company is focusing on the growing Edge AI market by integrating AI into its hardware and software solutions. It’s working closely with Qualcomm to incorporate its AI framework into Lantronix Inc.’s (NASDAQ:LTRX) Edge AI systems to enhance real-time analytics. The company is developing solutions for various industries, which include banking, electronics manufacturing, and agriculture. The acquisition of NetComm for $6.5 million further expands the company’s connectivity capabilities, which is crucial for Edge AI deployments.
The Edge AI market is projected to reach $76 billion by 2031. Lantronix Inc. (NASDAQ:LTRX) is positioning itself to capitalize on this market. In FQ2 2025, the company reported a revenue of $31.2 million. The NetComm acquisition is expected to add $300,000 to $400,000 in quarterly operating expenses. For FQ3, revenue is projected between $27 and $31 million.
180 Degree Capital Corp is optimistic about the company’s future and stated the following regarding Lantronix Inc. (NASDAQ:LTRX) in its Q2 2024 investor letter:
“More recently, we have been working behind the scenes with the management and board of Lantronix, Inc. (NASDAQ:LTRX) on ways to solidify the strong foundation of the company and set it up for success and significant value creation for stockholders in the future. We believe LTRX’s new CEO, Saleel Awsare brings an interesting and successful background to LTRX. What we believe he needed to be in the best position for success were board members who have experience navigating the challenges unique to microcapitalization companies. Following multiple discussions, we introduced Saleel and his board to Narbeh Derhacobian, the former Chief Executive Officer and founder of our former portfolio company, Adesto Technologies, Inc., and one of Adesto’s board members, Kevin Palatnik, who has significant experience as a CFO at multiple related businesses. We were pleased to see that LTRX’s board saw the same value that we do in these individuals, in terms of helping Saleel and his team to have the best opportunities to achieve multiple catalysts that could lead to material increases in value for LTRX and its stockholders.”
1. Evolv Technologies Holdings Inc. (NASDAQ:EVLV)
Share Price as of March 24: $3.07
Number of Hedge Fund Holders: 19
Evolv Technologies Holdings Inc. (NASDAQ:EVLV) offers AI-based weapons detection solutions, primarily through its Evolv Express system. This is designed for touchless security screening to identify firearms, explosives, and knives. It also provides Evolv Insights, which is an analytics platform that delivers data on visitor flow and system performance.
The company’s touchless screening technology has speeds up to 10 times faster than traditional methods and potential cost savings of up to 70%. The system also provides analytics on visitor flow and security performance. The company targets a broad market, which includes education, healthcare, entertainment, government, and industry. This represents a potential $20 billion annual market.
In Q3 2024, the company surpassed 2 billion screenings and added 465 new subscriptions. It expanded its reach to over 1,100 schools and 400 hospital buildings and gained 3 new professional sports stadium clients and 3 additional Fortune 500 customers. Later in Q4, the company deployed over 6,000 Evolv Express units internationally, which activated 470 new multi-year subscriptions, and added nearly 60 new customers.
As we acknowledge the growth potential of Evolv Technologies Holdings Inc. (NASDAQ:EVLV), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EVLV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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