12 Best Performing Small Cap Stocks So Far in 2025

10. Cerence Inc. (NASDAQ:CRNC)

Number of Hedge Fund Holders: 10

Year-to-Date Performance as of February 17: 75.03%

Cerence Inc. (NASDAQ:CRNC) provides AI-powered virtual assistants for the transportation market globally. It offers both edge and cloud-connected software, along with professional services. It specializes in conversational AI solutions like speech recognition and natural language understanding.

The company’s automotive AI segment helped it make a revenue of $50.9 million in FQ1 2025. While this was down 63% from the previous year, it surpassed the high end of its guidance which drove the stock’s surge. It’s securing new design wins and customer programs, which shows market demand for its AI solutions. It achieved six design wins for core products and two GenAI contracts with major automakers, maintaining a strong market presence with a 51% share of worldwide auto production. The launch of CaLLM Edge, which is the first LLM for offline automotive use, also highlights its innovation.

It’s prioritizing cost-efficiency through restructuring and operational improvements. Significant reductions in operating expenses, which amount to $29 million year-over-year through layoffs and office consolidations, resulted in improved gross margins of 65%. This contributed to investor confidence. Cerence Inc. (NASDAQ:CRNC) is confident in its ability to meet its financial goals. This includes maintaining its full-year guidance of $236–247 million in revenue and projecting $20 million of fixed contracts.