In this article, we will take a detailed look at 12 Best AI Penny Stocks to Buy According to Hedge Funds.
AI penny stocks are typically small-cap companies that focus on artificial intelligence technologies, such as machine learning, automation, and data analytics. These stocks, typically trading under $5.00 per share, belong to emerging tech firms that develop AI-powered software, robotics, or cloud-based AI solutions. Investors are drawn to AI penny stocks due to their high growth potential, as advancements in AI continue to disrupt and/or complement industries like healthcare, finance and cybersecurity. However, these stocks also come with significant risks, including volatility, low liquidity, lack of financial stability, and the potential for the share price to go to zero. These risks are even more pronounced in the context of the Chinese startup called “DeepSeek” potentially disrupting the AI inferencing market, meaning that some of the AI software and applications developed by penny stocks could eventually become commoditized and thus impossible to profitably monetize.
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Hedge funds have been quite active in the AI space, as the most widely owned companies by hedge funds are large cap technology stocks with strong exposure to the AI megatrend. However, as hedge funds are striving to maximize their potential alpha, they are also actively seeking investments in the less followed small cap space and especially penny stocks. Hedge funds are also very keen to react to major market shifts and thus provide insights into potential major risks. Here is what Horizon Kinetics commented about the DeepSeek development during their Q4 2024 letter published in January 2024:
“How terrible are the implications for spending growth of the AI hyperscaler companies now that AI models can be developed for $6 million instead of a gazillion dollars? If that order-of-magnitude performance/cost breakthrough is true, that might be an even greater boon to AI spending. The use cases for AI are so deep, wide and all-pervading in the true economic productivity sense, that the pace of adoption and the volume load upon data storage, retrieval and processing might even accelerate. The build-it-and-they-will-come phenomenon.”
It is certain that some hedge funds view the recent developments as favorable and potentially fueling more research and progress from AI developers, many of which are penny stocks. If training and inferencing of leading AI models become exponentially cheaper, this per se means exponentially lower barriers to entry for startups and much lower budget requirements for the budget-tight small cap stocks. This shift could lead to a surge in innovation, allowing smaller AI firms to compete with established players by developing cutting-edge models at a fraction of the previous cost. Additionally, reduced computational expenses may attract more venture capital and institutional interest, further accelerating the growth of AI-focused penny stocks. The key takeaway for investors is that, while the 2023-2024 market gains were fueled by large caps, it may be finally that moment when mid and small caps, including penny stocks, follow through, by leveraging the growing GPU infrastructure base at big tech hyperscalers as well as the Chinese technology contribution. If that is the case, then observing where smart money (hedge funds) is flowing may offer unique insights into the best AI penny stocks to buy. Given this, we will take a look at some of the best penny stocks according to hedge funds.
Pixabay/Public Domain
Our Methodology
To compile our list of AI penny stocks, we used Finviz to filter the technology companies with a share price of less than $5.00, as of March 14. We then individually identified companies that have significant revenue exposure to AI products or services. Finally, we compare the list with our proprietary database of hedge fund ownership as of Q4 2024 and include in the article the top 12 stocks with the highest number of hedge funds that own the stock.
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).
12. Veritone, Inc. (NASADQ:VERI)
Number of Hedge Fund Holders: 5
Veritone, Inc. (NASDAQ:VERI) is an American technology company specializing in AI solutions across various industries, including media, entertainment, government, public safety, and energy. Its proprietary operating system, aiWARE, is utilized by over 2,000 customers, such as police agencies, district attorney offices, media conglomerates, radio and TV stations, and movie studios. In the media sector, products like Veritone Attribute and Discovery assist broadcasters in verifying and measuring ad efficacy by correlating airtime with advertiser website activity. For government and public safety, Veritone Redact software enables the redaction of sensitive information from video or photographic evidence. The company’s AI-powered solutions also extend to energy, offering tools to predict optimal energy supply mixes and pricing to meet grid demand.
Veritone, Inc. (NASDAQ:VERI) has executed a transformative divestiture of its Media Agency business, in a transaction valued at up to $104 million, positioning itself as a pure-play AI enterprise software firm. The divestiture has significantly strengthened the company’s financial foundation, reduced debt servicing burden, and eliminated customer concentration risk with no single customer now accounting for more than 5% of revenues. The company’s aiWARE platform serves as an operating system for AI, supporting dynamic and scalable cognitive architectures and workflows, currently serving hundreds of enterprise customers globally. In the commercial sector, VERI has secured significant partnerships, while also being in the final stages of securing a material media customer deal worth over $20 million in potential total contract value. The Public Sector vertical shows strong growth potential with a pipeline exceeding $110 million, and the company has added 13 new Public Sector customers in the quarter.
Looking ahead, Veritone, Inc. (NASDAQ:VERI) expects fiscal 2025 revenue to be between $107 million to $122 million, representing a 22% increase YoY at the midpoint, with Public Sector growth projected between 100% to 150% YoY. The company has executed over $40 million of annualized cost savings since the beginning of 2023, including over $17 million of annualized cost reductions in fiscal 2024, positioning it well for future growth and profitability as early as fiscal 2026. With strong guidance ahead and a stock price below $5.00, VERI is one of the best AI penny stocks to buy according to hedge funds.
11. Rekor Systems, Inc. (NASDAQ:REKR)
Number of Hedge Fund Holders: 5
Rekor Systems, Inc. (NASDAQ:REKR) is a technology company specializing in AI-driven roadway intelligence and traffic management solutions. By integrating AI, computer vision, and machine learning, REKR transforms video and sensor data into actionable insights, enhancing traffic safety and urban mobility. Its flagship platform, Rekor One™, serves as the foundation for products like Rekor Discover™, which provides real-time traffic data analytics, and Rekor Command™, designed for transportation management. These solutions are utilized by government agencies for traffic operations and incident detection, as well as by commercial entities for applications such as parking enforcement and urban planning.
Rekor Systems, Inc. (NASDAQ:REKR) reported Q3 2024 revenues of $10.5 million, representing a 16% increase YoY. The company achieved significant milestones including inclusion on Florida’s Approved Product List (APL) and has begun the first wave of statewide deployments through Florida DOT’s Central Office. The company’s systems proved valuable during Florida’s challenging hurricane season, providing reliable traffic data for emergency operations and evacuations. In New York, REKR secured access to approximately 115,000 miles of public roadways, marking a critical entry point for potential broader statewide rollout.
Rekor Systems, Inc. (NASDAQ:REKR) is implementing cost optimization measures expected to reduce 2025 expenses by up to $15 million compared to 2024. Management is focused on creating a leaner, more efficient operation while positioning for significant breakout opportunities in 2025 and beyond. The company has eliminated an additional $20 million in optional advances from Yorkville, demonstrating commitment to reducing reliance on external capital. With industry-leading technology platforms, AI capabilities and strong partnerships, REKR aims to transform 4.2 million miles of US roadways, potentially achieving a 40% CAGR in revenue over the next 5 years. With such strong growth potential ahead, REKR is one of the best AI penny stocks to buy according to hedge funds.
10. LivePerson, Inc. (NASDAQ:LPSN)
Number of Hedge Fund Holders: 6
LivePerson, Inc. (NASDAQ:LPSN) is a global technology company specializing in conversational AI and messaging solutions. Its flagship platform, Conversational Cloud, enables businesses to engage with customers through various channels, including web, mobile, social media, and messaging apps. The platform integrates advanced AI capabilities, such as chatbots and voice assistants, to provide personalized and efficient customer interactions. LPSN serves a diverse clientele across industries like retail, financial services, telecommunications, and healthcare, offering tools for customer intent analysis and workforce optimization. The company’s solutions are utilized by over 18,000 brands worldwide, enhancing digital engagement and customer service operations.
LivePerson, Inc. (NASDAQ:LPSN) delivered a strong performance in Q4 2024, reporting revenue of $73.2 million, which surpassed their guidance range. The company also exceeded expectations for adjusted EBITDA, achieving $8.1 million, well above the guided range of $2.1 million to $7.1 million. A significant portion of this success came from recurring revenue, which totaled $68.6 million and accounted for an impressive 94% of total revenue. The company made notable strides in its GenAI capabilities, with a 17% sequential increase in customers and a 37% sequential rise in conversations leveraging these technologies. Additionally, LPSN gained momentum in deal activity, securing 39 agreements during the quarter, including 30 expansions and renewals alongside 9 new client wins. Highly regulated sectors, such as healthcare, financial services, and telecommunications, contributed 80% of the quarter’s deal values, underscoring the company’s strong industry focus.
Looking ahead, LivePerson, Inc. (NASDAQ:LPSN) plans to deepen its technological footprint with strategic integrations with Cisco and Amazon Connect, slated for the first half of 2025. However, despite these advancements, the company forecasts a revenue decline for fiscal year 2025, with projections between $240 million and $255 million, representing a year-over-year decrease of 18% to 23%. That said, the company remains committed to maintaining its high recurring revenue percentage, which is expected to be 93%. Adjusted EBITDA for 2025 is anticipated to range between $0 million and $14 million, with margins projected between 0.0% and 5.8%. These projections reflect a cautious yet strategic outlook as LPSN focuses on balancing innovation and financial stability. As at least six hedge funds own the stock as of Q4 2024, LPSN is one of the best AI penny stocks to buy according to hedge funds.
9. Research Solutions, Inc. (NASDAQ:RSSS)
Number of Hedge Fund Holders: 8
Research Solutions, Inc. (NASDAQ:RSSS) is a provider of cloud-based technologies that streamline the discovery, access, management, and analysis of scientific content. Their platforms, including Article Galaxy and Discover, enable researchers to efficiently access and manage scientific literature, leveraging advanced AI and natural language processing technologies. Serving over 1,300 research organizations globally, including more than 70% of the world’s top pharmaceutical companies and prestigious universities, RSSS’ tools facilitate literature discovery, access, and management, enhancing research productivity and innovation.
Research Solutions, Inc. (NASDAQ:RSSS) delivered strong Q2 2025 results with total revenue increasing 15.5% to $11.9 million, driven by a 47% growth in Platform subscription revenue to $4.6 million. The company achieved record organic net new deployments and strong Annual Recurring Revenue (ARR) growth, ending the quarter with $19.1 million in annual recurring revenue, up 23% YoY. The ARR is composed of $12.7 million B2B ARR and approximately $6.4 million in normalized ARR from Scite’s B2C subscribers. Gross margin improved significantly to 48.9%, a 540-basis-point increase over the prior year, primarily due to the revenue mix shift towards the higher-margin Platforms business.
Research Solutions, Inc. (NASDAQ:RSSS) also demonstrated strong cash generation with $1 million in operating cash flow for the quarter and $5.8 million on a trailing 12-month basis. Notably, Scite, which was acquired in December 2023, experienced over 75% pro forma revenue growth over the prior year quarter, leading to an increase in the projected contingent earnout liability. The company has implemented strategic changes, including splitting the sales team into corporate and academic focused teams, which has resulted in increased deal flow. Looking ahead, management is focusing on improving UX and CX across platforms, continuing AI integration into workflows, and enhancing instrumentation and analytics capabilities. With eight hedge fund holders at the end of Q4 2024, RSSS is one of the best AI penny stocks to invest in according to hedge funds.
8. Red Cat Holdings, Inc. (NASDAQ:RCAT)
Number of Hedge Fund Holders: 9
Red Cat Holdings, Inc. (NASDAQ:RCAT) is a drone technology company that integrates robotic hardware and software for military, government, and commercial applications. Through its subsidiaries, RCAT has developed a Family of Systems, including the Black Widow™, a small unmanned ISR system that was awarded the US Army’s Short Range Reconnaissance Program (SRR) of Record contract. Other products in their lineup are the TRICHON™, a fixed-wing VTOL drone designed for extended endurance and range, and the FANG™, the industry’s first line of NDAA-compliant FPV drones optimized for military operations with precision strike capabilities. These offerings provide critical situational awareness and actionable intelligence to on-the-ground warfighters, battle commanders, firefighters, and public safety officials.
Red Cat Holdings, Inc. (NASDAQ:RCAT) has secured a significant sole source contract for the Black Widow drone program with the US Army’s SRR program, which involves 12,000 drones. The company has formed a strategic partnership with Palantir to integrate visual navigation and artificial intelligence capabilities into the Black Widow drone, making it one of the most capable military drones that can fit in a rucksack. RCAT has updated its revenue guidance from $50 million to $55 million, with expanded goalposts of $80 million to $120 million, incorporating expected SRR-related revenue. The Black Widow drone addresses two critical battlefield challenges: electronic warfare and GPS denial, with successful testing completed in EW World.
Red Cat Holdings, Inc. (NASDAQ:RCAT) is preparing for Low Rate Initial Production (LRIP) in the first half of 2025 and full rate production in the second half of 2025. Management expects the company to achieve up to 50% gross margins under mass production, with additional margin improvement potential from the high-margin Palantir software integration. The company has also acquired FlightWave, adding the Edge 130 drone to their product mix, which has the best flight time among Blue UAS list products. Recent quotes for Black Widow customers, excluding SRR, have reached approximately $14.7 million, primarily from US DoD customers. Given the significant technological advancements and at least nine hedge fund holders, RCAT is one of the best AI penny stocks to buy according to hedge funds.
7. MicroVision, Inc. (NASDAQ:MVIS)
Number of Hedge Fund Holders: 11
MicroVision, Inc. (NASDAQ:MVIS) is a technology company specializing in automotive lidar sensors and advanced driver-assistance systems (ADAS) solutions. Their product suite includes the MAVIN dynamic view lidar system, which integrates short, medium, and long-range sensing into a single unit, and the MOVIA lidar sensors tailored for industrial applications. Additionally, their MOSAIK software suite automates data classification processes, enhancing machine learning and artificial intelligence projects. These offerings serve sectors such as autonomous vehicles, industrial automation, smart infrastructure, and robotics.
MicroVision, Inc. (NASDAQ:MVIS) is strategically positioning itself in both industrial and automotive LiDAR markets, with industrial sales representing the strongest opportunity for establishing annual recurring revenue streams. The company’s core products offer fully integrated LiDAR hardware and perception software running at low power, which serves as a key differentiator in the market. The company is currently engaged in 7 RFQs with automotive OEMs for passenger vehicles, focusing on L2+ and L3 LiDAR safety applications. MVIS has significantly bolstered its balance sheet through a convertible note facility, with total liquidity of $234 million comprising $81 million in cash, $122.6 million ATM facility availability, and $30 million remaining capital commitment.
MicroVision, Inc. (NASDAQ:MVIS) has streamlined its operations with a reduced annual OpEx run rate of $48 million to $50 million for 2025, extending its runway into 2026. The company maintains a competitive advantage through its ability to scale production at lower costs, utilizing custom silicon and the lowest cost sequential flash LiDAR and MEMS scanning technology. Current production capacity stands at approximately 45,000 units annually on a single shift, providing sufficient capability to meet near-term demand. With at least 11 hedge fund holders, MVIS is one of the best AI penny stocks to buy according to hedge funds.
6. Aeva Technologies, Inc. Common Stock (NASDAQ:AEVA)
Number of Hedge Fund Holders: 11
Aeva Technologies, Inc. (NASDAQ:AEVA) specializes in the design and development of LiDAR sensing systems and related perception software solutions. Their products, such as Aeries II and Atlas, utilize Frequency Modulated Continuous Wave (FMCW) technology to deliver 4D LiDAR capabilities, detecting instant velocity alongside 3D position. These sensors are integrated into various applications, including automotive-grade production for passenger cars, trucking, industrial automation, consumer electronics, and security markets. By incorporating advanced AI and machine learning algorithms, AEVA’s solutions enhance object detection and classification, contributing to improved safety and efficiency in autonomous systems.
Aeva Technologies, Inc. (NASDAQ:AEVA) demonstrated significant commercial momentum in Q3 2024, securing multiple production wins and advancing strategic partnerships. The company secured a major industrial production win with The Indoor Lab through a multiyear supply agreement, which includes deployments at JFK and SFO airports with potential revenue opportunities of multiple tens of millions of dollars over the next 2-3 years. In the automotive sector, AEVA’s partnership with Torc and Daimler Truck achieved a significant milestone with successful validation of fully driverless operations at highway speeds. The company was selected for a major European passenger OEM’s automated vehicle validation program, leveraging their FMCW advantages like direct velocity measurement.
Aeva Technologies, Inc. (NASDAQ:AEVA) made strategic progress by pulling forward the first shipments of Atlas by almost 6 months, enhancing their ability to support recent production wins and capitalize on additional opportunities. The company’s financial position remains strong with total liquidity of $259.8 million, comprised of $134.8 million in cash, cash equivalents and marketable securities, and a $125 million available undrawn equity facility. Looking ahead, management is focused on executing multiple passenger RFQs and engagements, including with a global top 10 passenger OEM, while responding to growing interest for their perception solutions in industrial automation and security applications. At least 11 hedge funds owned AEVA at the end of Q4 2024 and it is therefore one of the best AI penny stocks to buy according to hedge funds.
5. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 13
BigBear.ai Holdings, Inc. (NYSE:BBAI) specializes in AI-powered decision intelligence solutions across sectors such as defense, manufacturing, healthcare, and logistics. Their offerings encompass data ingestion, enrichment, processing, machine learning, predictive analytics, and visualization services. Clients include US intelligence agencies, the Department of Defense, and organizations in manufacturing, distribution, and healthcare. BBAI’s technology aids in supply chain management, autonomous systems, and cybersecurity, leveraging advanced AI and machine learning to address complex challenges. The US-based company ranked tenth on our recent list of 10 AI Stocks That Wall Street Is Betting On.
BigBear.ai Holdings, Inc. (NYSE:BBAI) showcased solid growth and financial progress in 2024, reporting a Q4 revenue of $43.8 million, an 8% increase from the previous year. The company demonstrated resilience by improving its financial position through strategic moves, such as exchanging $182.3 million in convertible senior notes maturing in 2026 for those due in 2029. This action, combined with $58 million already converted into equity, significantly strengthened its balance sheet. By the end of 2024, BBAI reported a healthier cash position of $50.1 million and further bolstered its finances with $64.7 million in gross proceeds from warrant exercises in Q1 2025. These measures have led to a dramatic reduction in net debt, decreasing from $150 million to $27 million, and improved the debt-to-cash ratio from 4.0 to 1.2.
Operationally, BigBear.ai Holdings, Inc. (NYSE:BBAI) achieved notable momentum with major contract wins, expanding its backlog to $418 million by the close of 2024—a 2.5x growth compared to the previous year. This growth came with an improved gross margin of 37.4%, up from 32.1%, driven by year-end financial adjustments. However, challenges remain, as the company recorded a net loss of $108.0 million in Q4 2024, primarily due to non-cash valuation changes tied to derivative liabilities. Looking ahead, management projects 2025 revenue in the range of $160 million to $180 million, although it anticipates negative single digit Adjusted EBITDA. Despite these hurdles, the company’s strengthened financial foundation and growing operational base signal promising long-term potential. With at least 13 hedge funds owning the stock, BBAI is one of the best AI penny stocks to buy according to hedge funds.
4. Vuzix Corporation (NASDAQ:VUZI)
Number of Hedge Fund Holders: 13
Vuzix Corporation (NASDAQ:VUZI) specializes in the design, manufacture, and marketing of smart glasses and augmented reality (AR) technologies for enterprise, medical, defense, and consumer markets. Their product lineup includes the M400 and M4000 series smart glasses, Vuzix Blade, Vuzix Shield, and Vuzix Ultralite smart glasses, all of which integrate cameras, sensors, and computing capabilities to facilitate applications such as remote support, training, and field service. The company also offers OEM optical components, including waveguide optics and display engines, to support various AR applications. With over 375 patents and patents pending, VUZI emphasizes innovation in wearable display technology. Their products are distributed globally through resellers, distributors, direct sales to commercial customers, and online platforms.
Vuzix Corporation (NASDAQ:VUZI) is experiencing significant developments in its AR/AI smart glasses business, highlighted by a strategic partnership with Quanta Computer that included a $20 million multiphase investment. The company introduced multiple new products, including the Ultralite Pro AR smart glasses platform and Ultralite Audio smart glasses platform at CES 2025, receiving positive market response and industry recognition. The company’s proprietary waveguide technology enables processing hundreds of waveguides per single run, providing a significant competitive advantage in terms of production capacity and cost. VUZI’s patent portfolio has expanded by 50% in the past two years to over 425 patents, strengthening its position in optical waveguide and wearable computing technologies.
Vuzix Corporation (NASDAQ:VUZI) anticipates significant growth in 2025 through multiple design wins for both consumer and enterprise OEM products, along with expanded opportunities in defense and security markets. Financial position shows approximately $18 million in cash and cash equivalents as of year-end 2024, with additional funding expected through the remaining $10 million investment from Quanta Computer. The company has implemented significant cost reductions, achieving a 36% YoY decrease in recurring cash operating costs in Q4 2024. Management expects to maintain these expense savings while moving forward with business expansion in 2025, with adequate resources to support operations well into 2026. With at least 13 hedge funds owning the stock, VUZI is one of the best AI penny stocks to buy according to hedge funds.
3. 8×8, Inc. (NASDAQ:EGHT)
Number of Hedge Fund Holders: 16
8×8, Inc. (NASDAQ:EGHT) is a provider of cloud-based communication solutions, offering services such as voice, video, chat, and contact center capabilities through its unified platform. Their product suite includes 8×8 Work, a unified communications solution delivering voice services, secure video meetings, and messaging; 8×8 Contact Center, a cloud-based contact center-as-a-service solution; and 8×8 Engage, an AI-powered tool designed to enhance customer engagement. The company also offers a Communications Platform as-a-Service (CPaaS), enabling businesses to integrate communication services directly into their applications. Serving various industries including healthcare, education, manufacturing, retail, financial services, and government, EGHT’s solutions are designed to improve business communications and customer interactions. The California-based company ranked fifth on our recent list of Top 9 Game-Changing Stocks for AI Revolution.
8×8, Inc. (NASDAQ:EGHT) has been on a deliberate transformation journey, with the Fuze acquisition marking a significant milestone three years ago, providing engineering teams and enterprise customers while bolstering cash flow and revenue growth. The company has successfully reduced 35% of its debt since August 2022, enhancing financial flexibility and enabling product development. The company’s service revenue has remained relatively flat to slightly down, but expenses have been reduced significantly, leading to improved profitability and cash flow generation. EGHT differentiates itself by offering UCaaS, CCaaS, and CPaaS solutions natively owned, focusing on small to medium enterprise customers while maintaining the capability to serve any customer size.
8×8, Inc. (NASDAQ:EGHT) has demonstrated growth in specific areas, with new AI products growing 60% year-over-year, albeit from a small base. EGHT has embraced Microsoft Teams as a partner rather than a competitor, resulting in higher attach rates for their contact center solutions in Teams-related deals. Looking forward, management plans to complete Fuze customer migrations by December 31, 2025, which should remove a current revenue headwind by 2026. The company is making strategic investments in go-to-market initiatives and maintaining its multichannel strategy through direct business, agency, and VAR channels. At least 16 hedge funds owned EGHT stock at the end of Q4 2024 and it is therefore one of the best AI penny stocks to buy according to hedge funds.
2. Unisys Corporation (NYSE:UIS)
Number of Hedge Fund Holders: 25
Unisys Corporation (NYSE:UIS) is a global information technology company that provides a range of services, including digital transformation, cloud solutions, cybersecurity, and enterprise computing. The company offers technology consulting, managed services, and solutions that help businesses modernize their infrastructure and operations. UIS primarily serves industries such as financial services, government, healthcare, and commercial sectors. Its products include advanced AI solutions, with a focus on leveraging automation and machine learning to optimize business processes. The company has been investing in AI and data analytics to enhance its offerings and meet the increasing demand for intelligent, data-driven technologies.
Unisys Corporation (NYSE:UIS) delivered solid Q4 results with 10% sequential revenue growth and a strong non-GAAP operating margin of 11.6%. The company exceeded its initial free cash flow outlook and achieved its goal of improving cash conversion, with pre-pension free cash flow nearly doubling to $82 million in 2024. For 2025, UIS expects pre-pension free cash flow of approximately $100 million, demonstrating continued progress toward long-term goals. The company raised its License & Support (L&S) revenue expectations to approximately $390 million in 2025 and $400 million in 2026, with an average expected gross margin of approximately 70%. New business Total Contract Value (TCV) showed strong momentum, reaching approximately $790 million for the full year, up 29% compared to 2023, with new logo TCV more than doubling year-over-year.
Unisys Corporation (NYSE:UIS)’s strategic priorities for 2025 include focusing on AI, application services, ClearPath Forward 2050, and go-to-market initiatives. Unisys demonstrated operational improvements through sustained Ex-L&S gross margin expansion and stronger L&S performance, while the resolution of several legal matters in 2024 eliminates future headwinds to cash from legal costs. The company’s workforce initiatives showed positive results with low trailing 12-month voluntary attrition of 11.8% compared to 12.4% a year ago. With at least 25 hedge funds owning the stock, UIS is one of the best AI penny stocks to buy according to hedge funds.
1. TTEC Holdings, Inc. (NASDAQ:TTEC)
Number of Hedge Fund Holders: 28
TTEC Holdings, Inc. (NASDAQ:TTEC) is a global customer experience technology and services company that specializes in providing end-to-end solutions for customer engagement, including contact center services, digital transformation, and automation. The company offers a range of services such as cloud-based solutions, customer service outsourcing, and data analytics to help businesses improve customer experiences. TTEC serves various industries, including telecommunications, healthcare, financial services, and retail. The company has been expanding its AI-driven solutions to enhance customer interactions, utilizing machine learning and automation to drive operational efficiencies and deliver personalized services.
TTEC Holdings, Inc. (NASDAQ:TTEC) reported full year 2024 revenue of $2.21 billion, representing a 10.4% decrease YoY, with adjusted EBITDA of $202 million or 9.2% of revenue. TTEC faced revenue headwinds primarily due to two client business decisions unrelated to performance, with both client relationships remaining strong and offering growth potential. The company made significant progress in 2024 by winning 15 new enterprise clients in the Engage segment and 55 new clients in the Digital segment, demonstrating success in their diversification strategy across solutions and core industries. TTEC has heavily invested in AI integration, with over 145-155 AI projects underway in the Digital segment and AI tools being implemented across three-quarters of their associate base.
Looking ahead to 2025, TTEC Holdings, Inc. (NASDAQ:TTEC) expects revenue of $2.04 billion, representing a 7.6% decrease, but projects improved profitability with adjusted EBITDA of $225 million, an 11.2% increase over the prior year. TTEC remains focused on three major priorities: diversification strategy with broadened geographic delivery footprint, expanded digital CX value proposition with differentiated technology-enabled solutions, and achieving historical growth and run rate margins in the near term. TTEC’s strategic investments in offshore expansion are expected to continue, with offshore mix growing approximately 300 basis points in 2024 and projected to grow another 300-plus basis points in 2025.
Overall, TTEC Holdings, Inc. (NASDAQ:TTEC) ranks first on our list of the 12 best AI penny stocks to buy according to hedge funds. While we acknowledge the potential of TTEC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TTEC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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