15 Best Small Cap AI Stocks to Buy Right Now

8. IPG Photonics Corporation (NASDAQ:IPGP)

Number of Hedge Fund Holders: 31

​IPG Photonics Corporation (NASDAQ:IPGP) is a leading developer and manufacturer of high-performance fiber lasers and amplifiers used in a wide range of industrial, medical, and advanced technology applications. Its products are integral to processes such as cutting, welding, marking, and 3D printing, serving industries including automotive, aerospace, electronics, and materials processing. The company also provides lasers for medical procedures, defense systems, and telecommunications. IPGP’s vertically integrated business model supports innovation and cost efficiency across its product lines. It is exploring the use of AI in areas such as process monitoring, adaptive laser control, and smart manufacturing, creating opportunities to enhance performance and expand into AI-enabled industrial solutions.

IPG Photonics Corporation (NASDAQ:IPGP) serves a $3 billion market in laser sources, with opportunities to grow faster than market rates through driving adoption in areas like laser welding, cleaning, and additive manufacturing. Under new CEO Mark Gitin, who brings over 30 years of laser industry experience, the company has been diversifying its portfolio and geographic presence. The company has strategically reduced its exposure to the competitive Chinese flatbed cutting market to less than 5% of its business while expanding into more differentiated areas like welding, additive manufacturing, cleaning, and micromachining. IPGP has maintained stability with a book-to-bill ratio of about 1 for the last three quarters, demonstrating a strong business model with good cash generation even at current revenue levels.

IPG Photonics Corporation (NASDAQ:IPGP) has significant growth opportunities in medical applications (particularly urology with a $2 billion TAM), micromachining, and advanced markets, representing a total $5 billion TAM with potential for hundreds of millions in growth over the next several years. The recent acquisition of cleanLASER has strengthened its position in the industrial cleaning market, which represents a multi-billion dollar opportunity to replace traditional chemical and abrasive cleaning methods. While current market visibility remains challenging, the company has seen some positive indicators including PMI improvements in Europe, stability in China, and upticks in Japan and North America. With 31 hedge funds owning the stock, IPGP is one of the best small cap AI stocks to buy right now.