12 Best Small Cap AI Stocks To Buy According to Hedge Funds

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4. Synaptics Inc. (NASDAQ:SYNA)

Market Cap as of December 2: $3.29 billion

Number of Hedge Fund Holders: 23

Synaptics Inc. (NASDAQ:SYNA) specializes in human interface solutions, including touchpads and touchscreens. Recently, it has shifted its focus towards edge AI, aiming to enhance device intelligence. By incorporating AI into its products, it enables devices to better understand and respond to user interactions.

It delivered strong quarterly performance, with revenue up 8.41% in FQ1 2025, as compared to the year-ago period. A key driver of this growth is the company’s focus on AI-powered solutions. One such solution is the AI hub, an innovative product that connects multiple devices, reducing the need for cloud connectivity, designed to empower edge devices with advanced AI capabilities, enabling them to perform complex tasks locally. This approach offers significant benefits, including reduced latency, improved privacy, and lower power consumption.

This shift towards edge computing aligns with industry trends and addresses the growing demand for intelligent and autonomous devices. The AI hub is poised to revolutionize the way devices interact and operate, opening up new opportunities for growth and innovation. The company’s commitment to innovation and focus on AI-driven solutions position it for continued success.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Synaptics Incorporated (NASDAQ:SYNA) in its first quarter 2024 investor letter:

“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, and systems that improve productivity or efficiency for their clients. Synaptics Incorporated (NASDAQ:SYNA), a developer of human interface semiconductor solutions for electronic devices and products, sold off by -14%. The revenue picture for the fiscal second quarter was mixed with a strong rebound in mobile offsetting declines in Internet-of-Things as well as enterprise & auto. Earnings were better than expected due to strong operating expense control.”

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