15 Best Small Cap AI Stocks to Buy Right Now

11. Allegro MicroSystems, Inc. (NASDAQ:ALGM)

Number of Hedge Fund Holders: 27

​Allegro MicroSystems, Inc. (NASDAQ:ALGM) is a global semiconductor company that designs and manufactures sensor and power ICs used in motion control and energy-efficient systems. Its products are critical for applications in automotive, industrial, and consumer electronics, supporting functions such as electric powertrain, ADAS, factory automation, and robotics. The company’s portfolio includes magnetic sensors, current sensors, and motor driver ICs. ALGM’s technology enables high-precision sensing and power efficiency in complex electronic systems. It is actively integrating AI and machine learning into its sensor platforms and development processes, creating opportunities for smarter, more adaptive system solutions in automotive and industrial markets.

Allegro MicroSystems, Inc. (NASDAQ:ALGM) delivered a resilient Q3 2025 performance, with net sales of $178 million and EPS of $0.07 – both above the midpoint of guidance. While total sales declined 5% sequentially due to an 8% drop in automotive, the industrial and other segments grew 5%, driven by strength in medical and data center markets. The company made meaningful progress in product innovation, doubling its new product introductions over the past few years and achieving notable design wins in electric vehicles, data centers, clean energy, and medical applications. Gross margin remained stable at 49.1%, and ALGM further strengthened its balance sheet by voluntarily paying down $25 million in debt.

Strategically, Allegro MicroSystems, Inc. (NASDAQ:ALGM) is leaning heavily into secular growth trends in electrification and autonomy, underpinned by its leadership in magnetic sensing and targeted power ICs. The company continues to roll out high-performance 48V-ready solutions for automotive and industrial markets, including a cutting-edge System-on-Chip for hybrid electric vehicles that won recognition at Electronica 2024. Long-term growth is bolstered by recent M&A – expanding ALGM’s addressable market by $3.7B – and by a fabless, asset-light model that enhances scalability. With strong diversification, no single customer exceeding 10% of sales, and a focus on margin expansion, ALGM is well-positioned for sustained growth in both automotive and select industrial sectors. With 27 hedge funds owning the stock, ALGM is one of the best small cap AI stocks to buy right now.