In this article, we will take a look at the 13 Best Small Cap Tech Stocks to Buy Now.
The S&P Small Cap 600, whose components have an average market capitalization of $3 billion, is down 11% from its record closing high set late last year. A number of connected issues have pushed the market lower, including President Trump’s tariffs, which would raise the cost of importing hundreds of billions of dollars in products, reducing profit margins at firms that can’t raise prices enough to offset the costs. Higher prices will boost inflation, suggesting that the Federal Reserve may raise interest rates rather than cut borrowing costs, putting more strain on the economy. These trends disproportionately affect small cap stocks since they usually can’t come up with as many cost-cutting options as their larger competitors, which means declining sales significantly impact profit margins. On the other hand, some analysts believe small companies may profit from Trump’s plans, notably decreased restrictions, and support for local sectors because small enterprises are more US-focused than global corporations.
Looking ahead, RBC Capital believes that the current year may be a watershed moment for small caps. The Federal Reserve’s effort to cut interest rates may encourage companies to take greater risks, thus increasing M&A and IPO activity. As conditions improve, small caps may begin to close the gap between their large cap competition.
AI’s Dominance in the Tech World
The rapid expansion of artificial intelligence (AI) continues to transform sectors throughout the world, and experts are keenly watching its effects on the broader US stock market. Morningstar, reviewing the US market in 2024, stated the following on January 3:
“Out of the 24.09 percentage points gained by the US Market Index in 2024, 13.2 came from just eight stocks, which are mainly seen as benefiting from artificial intelligence technologies: Nvidia, Apple, Amazon.com, Meta Platforms, Tesla, Broadcom, Microsoft, and Alphabet. In other words, 55 percent of total market gains in 2024 can be attributed to these companies. These same companies contributed 53 percent of total market gains in 2023.”
UBS further stated that AI has and will continue to fuel the expansion of the larger technology sector. According to the bank, following the implementation of ChatGPT in November 2022, the total market valuation of companies listed on the NASDAQ exchange climbed to around $13.5 trillion.
On the other side, some are questioning the current condition of the AI business. Sky-high valuations were one of the primary reasons why AI stocks were struck so hard by the tariff sell-off. That said, the AI trade had already lost pace before Trump’s tariffs rattled the global stock market. Concerns over overspending on AI infrastructure and competition from Chinese rivals caused the AI rally to stop in late January and early February. UBS analysts, however, are optimistic that the current sell-off will be comparable to the one that occurred in 2018. The analysts said that today’s tech dip is similar to the one that occurred during Trump’s first term when geopolitics and “fundamentals-related noise” momentarily muddled investors’ assessment of an otherwise decent future.
Our Methodology
For our list of the best small cap tech stocks to buy, we used finviz and looked at firms in the technology sector with market capitalizations ranging from $200 million to $2 billion. Using Insider Monkey’s hedge fund data for Q4 2024, we ranked these companies in increasing order of the number of hedge funds that own a position in them.
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).
13. Adeia Inc. (NASDAQ:ADEA)
Number of Hedge Fund Holders: 14
Market Capitalization: $1.51 billion
Adeia Inc. (NASDAQ:ADEA) is a premier R&D company that accelerates the adoption of new technologies in the media, entertainment, and semiconductor industries. It works as a licensing corporation, distributing its ideas under the Adeia brand.
Back in December, BWS Financial maintained a Buy rating on Adeia (NASDAQ:ADEA), with a $16 price target. Following Adeia’s announcement of a license arrangement with Amazon, the financial firm predicts an increased free cash flow by 2025. The arrangement with Amazon is the largest of numerous video streaming licenses that Adeia Inc. (NASDAQ:ADEA) has inked. This milestone underlines the notion that Adeia’s development is not exclusively based on legacy technology, but also new strategic relationships.
The technology company announced quarterly earnings per share of $0.47 in the fourth quarter of 2024, up $0.05 from the average estimate of $0.42. Revenue for the quarter also came above expectations, totaling $119.2 million vs $113.93 million. A succession of strategic collaborations, including new agreements with Amazon and Canon have contributed to the company’s excellent financial performance. These transactions have expanded Adeia’s client base and contributed to revenue growth.
12. Innodata Inc. (NASDAQ:INOD)
Number of Hedge Fund Holders: 15
Market Capitalization: $1.31 billion
Innodata Inc. (NASDAQ:INOD), originally Innodata Isogen, Inc., is an American IT company that provides business process, technology, and consulting services to help customers establish digital content creation and product strategies. It specializes in AI model training, data annotation, and digital transformation services, and serves a variety of sectors.
Innodata Inc. (NASDAQ:INOD) recently published Q4 2024 earnings, which showed a notable 127% year-over-year revenue increase, surpassing its own forecast. The company’s management further projects a 40% growth in revenue this year, citing the company’s position to take advantage of the increased demand for high-quality training data and AI-driven automation.
Following the company’s results, BWS Financial raised its price target for Innodata Inc. (NASDAQ:INOD) shares to $74, up from $45, and maintained a Buy rating on the stock. BWS Financial cited the company’s strategic efforts in increasing its staff, which are likely to help Innodata gain further projects. This development plan is consistent with the company’s aggressive revenue projections, which seek to exceed $300 million by 2026.
11. Radware Ltd. (NASDAQ:RDWR)
Number of Hedge Fund Holders: 22
Market Capitalization: $894.6 million
Radware Ltd. (NASDAQ:RDWR) is an Israeli systems software company that provides cybersecurity and application delivery solutions for cloud, on-premise, and software-defined data centers worldwide. The company’s “EPIC-AI” technology includes layers of AI capabilities across its product line to safeguard applications while minimizing expenses.
On February 21, Jefferies began coverage of Radware Ltd. (NASDAQ:RDWR), providing a Hold rating and setting a $26 price target on the company’s shares. The research firm’s report recognized Radware’s strong technological base, especially in light of expanding cloud and AI use. However, the competitive landscape was seen as a concern for the company, potentially resulting in single-digit sales growth in fiscal year 2024.
Radware Ltd. (NASDAQ:RDWR) also posted strong fourth-quarter 2024 profits, exceeding analyst estimates with a significant increase in both earnings per share and revenue. The company’s EPS hit $0.27, above the prediction of $0.22, while revenues increased to $73 million, exceeding the expected $70.56 million. These positive results show a 12% year-over-year increase in Q4 sales and a noteworthy 22.7% beat on EPS forecasts.
10. ACM Research Inc. (NASDAQ:ACMR)
Number of Hedge Fund Holders: 23
Market Capitalization: $1.71 billion
ACM Research Inc. (NASDAQ:ACMR) specializes in advanced semiconductor equipment, particularly wet processing technologies and semiconductor manufacturing devices. The company provides a variety of single-wafer wet cleaning equipment aimed at improving the production process and yield of integrated chips across the globe.
On February 28, JPMorgan analysts began coverage of ACM Research Inc. (NASDAQ:ACMR) with an Overweight rating and a price target of $36. The new coverage emphasizes ACM Research’s position in the semiconductor sector, notably in the Chinese market, as well as its potential for development as domestic semiconductor production expands. JPMorgan’s rating is based on the company’s strong presence in multiple semiconductor equipment markets, as well as its potential to leverage the growing Serviceable Available Market (SAM) in the Wafer Fabrication Equipment (WFE) sector and advanced packaging.
9. Jamf Holding Corp. (NASDAQ:JAMF)
Number of Hedge Fund Holders: 25
Market Capitalization: $1.70 billion
Jamf Holding Corp. (NASDAQ:JAMF) offers software-as-a-service solutions via a subscription model, leveraging direct sales, internet channels, and collaborations with companies such as Apple. The company offers a complete management and security solution tailored for Apple-first settings. Jamf’s software solutions continue to see high demand, with 76,000 customers and 33.9 million linked devices.
On March 4, Mizuho reaffirmed its Outperform rating on Jamf Holding Corp. (NASDAQ:JAMF) shares, with a price target of $18. This followed Jamf’s announcement of the acquisition of Identity Automation for around $215 million. The move is viewed as both complementary and strategic, expanding Jamf’s cybersecurity solutions, with Jamf’s management anticipating the purchase to immediately boost the company’s sales and non-GAAP operating profits. Meanwhile, Jamf’s latest financial results were mixed. The company announced a non-GAAP EPS of $0.17, above the consensus forecast, and total revenue of around $163.0 million, representing an 8% year-over-year increase. However, the yearly recurring revenue growth rate of 10% fell short of the expected 11%.
8. Axcelis Technologies, Inc. (NASDAQ:ACLS)
Number of Hedge Fund Holders: 27
Market Capitalization: $1.85 billion
Axcelis Technologies, Inc. (NASDAQ:ACLS) is a semiconductor equipment company that designs, manufactures, and supports ion implantation devices used in semiconductor chip creation. The Purion series is one of the company’s signature products, developed to increase chip production efficiency.
On February 10, Craig-Hallum reaffirmed its Buy rating for Axcelis Technologies, Inc. (NASDAQ:ACLS), with a target price of $105. While the firm forecasts some market downturn in the first half of the year, it expects demand to rebound in the consumer, automotive, and industrial end industries, benefiting Axcelis Technologies, Inc. (NASDAQ:ACLS).
Axcelis Technologies, Inc. (NASDAQ:ACLS) recently reported $252 million in revenue for the fourth quarter of 2024, with earnings per diluted share of $1.54. The company’s revenue marginally surpassed forecasts, with strong demand for off-the-market CS&I sales offsetting the projected reduction in system sales. Furthermore, the company announced an increase in its share repurchase authorization by $100 million on March 12, bringing the total authorized repurchase authorization to $215 million.
7. NCR Atleos Corporation (NYSE:NATL)
Number of Hedge Fund Holders: 30
Market Capitalization: $1.84 billion
NCR Atleos Corporation (NYSE:NATL) is a financial technology firm that offers self-service banking applications, ATM networks, and managed network services. It operates in North America, Europe, and Asia Pacific, with a customer base that includes financial institutions, merchants, and businesses.
On March 11, DA Davidson analyst Matt Summerville maintained a Buy rating on NCR Atleos Corporation (NYSE:NATL) with a $60 price target, citing confidence in the company’s performance and future. Summerville’s analysis revealed success in the Self-Service Banking (SSB) category, including an increase in ATM as a Service (ATMaaS), service-led market share gains, and a continuing hardware refresh cycle.
Despite certain obstacles, including a relative weakness in Europe and persistent softness in LibertyX operations, NCR Atleos’ overall execution has been strong, with key performance indicators in both the SSB and Network sectors pointing towards positive trends. The company’s financial record confirms this, with revenue of $4.3 billion in the previous year and an EBITDA of $832 million.
6. Extreme Networks Inc. (NASDAQ:EXTR)
Number of Hedge Fund Holders: 30
Market Capitalization: $1.91 billion
Extreme Networks, Inc. (NASDAQ:EXTR) provides cloud-based networking solutions that utilize machine learning, artificial intelligence, analytics, and automation. The company creates and manufactures wired and wireless network infrastructure equipment, as well as a wide range of networking software solutions for a variety of sectors.
On January 30, Lake Street analyst Eric Martinuzzi raised the price target for Extreme Networks Inc. (NASDAQ:EXTR) to $16 from $15 while keeping a Hold rating on the company. The firm increased its target price after being “pleased with the solid execution in 1H25” and the full-year forecast.
Extreme Networks Inc. (NASDAQ:EXTR) posted decent Q2 2025 numbers on January 29. While revenues for the quarter increased 4% to $279.4 million, adjusted EPS came in at $0.21. In addition, the company’s management stated that it is experiencing a positive rebound with major clients, resulting in significant share gains in a range of sectors such as healthcare, manufacturing, and Intelligent Reflecting Surfaces (IRS).
5. LiveRamp Holdings Inc. (NYSE:RAMP)
Number of Hedge Fund Holders: 33
Market Capitalization: $1.73 billion
LiveRamp Holdings Inc. (NYSE:RAMP) is an American software-as-a-service company that offers a data connectivity platform. Its services include data onboarding and conversion of offline data to online marketing data. The company also makes network switches, routers, and wireless access points that are designed to provide high-speed connection, network resilience, and scalability.
On February 4, Benchmark analysts reiterated their Buy rating and $42 price target for LiveRamp Holdings Inc. (NYSE:RAMP). In a market that is becoming increasingly reliant on first-party data, the analysts highlight LiveRamp’s excellent positioning with its identification and data-cleaning solutions. They also expressed confidence that the recent RPO unpredictability is more likely attributable to renewal scheduling than fundamental concerns with the company’s business strategy.
LiveRamp Holdings, Inc. (NYSE:RAMP) increased revenues by 12% in the third quarter of fiscal year 2025, marking the company’s fourth consecutive quarter of double-digit growth. The fiscal year-to-date free cash flow was $91 million, a 20% increase over the previous year.
4. Marqeta, Inc. (NASDAQ:MQ)
Number of Hedge Fund Holders: 37
Market Capitalization: $1.97 billion
Marqeta, Inc. (NASDAQ:MQ) operates a cloud-based open application programming interface platform that provides card issuance and transaction processing services. It offers solutions in many verticals, such as financial services, on-demand services, cost management, and e-commerce enablement.
Marqeta, Inc. (NASDAQ:MQ) reported a solid fourth quarter, with total process volume hitting $80 billion, up 29% from the same period last year. The company’s net revenue also climbed 14% to $136 million, led by a solid business mix and better-than-expected Christmas performance.
Following the company’s Q4 results, Mizuho analysts raised the price target on Marqeta, Inc. (NASDAQ:MQ) shares from $5 to $6, while keeping an Outperform rating. According to the analysts, Marqeta’s third quarter was particularly hard, but recent events indicate that the firm is recovering pace. A major portion of the fourth-quarter gross profit increase, which came in over four percentage points more than expected, was ascribed to a decreased effect from regulatory issues and the launch of new initiatives, which contributed around two percentage points.
3. Silicon Motion Technology Corporation (NASDAQ:SIMO)
Number of Hedge Fund Holders: 39
Market Capitalization: $1.79 billion
Silicon Motion Technology Corporation (NASDAQ:SIMO) and its subsidiaries are involved in creating, developing, and marketing NAND flash controllers for solid-state storage devices globally. The company provides controllers for computing-grade SSDs, enterprise-grade SSDs, eMMC and UFS mobile embedded storage, flash memory cards and drives, and specialty SSDs.
Silicon Motion Technology Corporation (NASDAQ:SIMO) recently released its Q4 2024 earnings, with an EPS of $0.91 that surpassed projections of $0.81. However, revenue fell short of expectations, totaling $191.2 million instead of the projected $196.46 million. This performance comes despite the backdrop of tough market conditions, notably in the NAND sector, which is under pricing pressure.
Back in late 2024, SIMO announced a deal with TOP-electronics to strengthen its market position in the EMEA. The partnership aims to provide Ferri integrated storage and display interface solutions for AI, AIoT, embedded, and automotive applications.
2. Applied Digital Corp. (NASDAQ:APLD)
Number of Hedge Fund Holders: 42
Market Capitalization: $1.42 billion
Applied Digital Corp. (NASDAQ:APLD) is a specialist data center company that designs, develops, and operates sophisticated digital infrastructure throughout North America. The company offers digital infrastructure solutions for blockchain mining operations, as well as GPU computing solutions for essential AI and HPC workloads.
On January 15, Lake Street Capital Markets reiterated its Buy rating on Applied Digital Corp. (NASDAQ:APLD), with a steady price target of $11. Rob Brown, the firm’s analyst, expressed satisfaction with the company’s second-quarter results, which exceeded expectations and represented another period of strong execution in its Bitcoin hosting and AI Cloud sectors. Both sectors are approaching full capacity, resulting in an annual EBITDA rate of more than $80 million.
The company is also focusing on the expansion of its HPC services for hyperscale clients by developing next-generation data centers. To that end, Applied Digital Corp. (NASDAQ:APLD) recently announced a $375 million financing agreement with Sumitomo Mitsui to expand its Ellendale HPC Campus. The financing will enable the company to settle current debts and fund the construction of the first two buildings on campus.
1. Rapid7 Inc. (NASDAQ:RPD)
Number of Hedge Fund Holders: 45
Market Capitalization: $1.76 billion
Rapid7, Inc. (NASDAQ:RPD) is a cybersecurity company that offers security analytics and automation solutions. It offers consulting services, penetration testing, IoT security testing, vulnerability management, and incident detection and response services. In terms of growth, the company’s go-to-market strategy has undergone considerable adjustments in order to improve sales effectiveness and market penetration.
On February 13, DA Davidson adjusted its price target for Rapid7 Inc. (NASDAQ:RPD) to $35, down from the prior goal of $39, while keeping a Neutral rating on the company. This decision comes in the aftermath of the company’s most recent quarterly financial reports. Rapid7 Inc. (NASDAQ:RPD) announced $844 million in revenue for the fiscal year 2024, a 9% increase over the previous year, fueled by $809 million in product subscription revenue. Meanwhile, the company’s GAAP operating income came in at $35 million, while non-GAAP operating income was $164 million, indicating increased profitability.
While we acknowledge the potential of RPD as an investment, our conviction lies in the belief that certain 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 RPD 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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