In this article, we will take a detailed look at 15 Best Small Cap AI Stocks to Buy Right Now.
Smaller-cap AI stocks may present potentially attractive investment opportunities for investors seeking exposure beyond the already well-known Big Tech giants. Many of these companies operate quietly under the radar, developing specialized AI products, software, and applications that could significantly impact various sectors, from healthcare and finance to cybersecurity and manufacturing. While large-cap technology leaders have already benefited greatly from early enthusiasm and experienced significant stock-price appreciation during calendar 2023-2024, smaller AI-focused companies often remain relatively undiscovered and undervalued. This positions them as potential second-wave beneficiaries, providing investors with an attractive entry point into the next stage of AI-driven growth. As the market increasingly recognizes the commercial viability and disruptive potential of these innovative, smaller-cap players, their stocks could offer substantial upside compared to their larger, more mature counterparts.
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The first wave of AI beneficiaries during 2023–2024 was largely limited to GPU manufacturers, semiconductor equipment providers involved in GPU production, and Big Tech companies that acquired GPUs and built data centers to secure the computing power needed to support the AI revolution. However, after two years of aggressive spending, 2025 is shaping up to be the year that determines whether further capacity is truly needed. The actual capabilities of AI remain largely at the level seen in early 2023 when ChatGPT was first introduced. With no major technological breakthrough to date, analysts have begun to question whether such massive hardware investments are justified. The issue was further amplified in January 2025, when a Chinese startup claimed to have trained an AI model with performance comparable to U.S. large language models – at only a fraction of the cost. If true, the Chinese firm DeepSeek could disrupt the AI training and inferencing market, potentially undermining the prevailing thesis that the world needs hundreds of billions in GPU infrastructure to meet computing power demand.
The aforementioned developments may have important implications for global markets. On one hand, the first-wave beneficiaries of AI could face a correction as demand for GPUs weakens and the substantial hardware investments made in 2023–2024 prove excessive. On the other hand, a second wave of beneficiaries may emerge, as Chinese technology drives down the cost of AI training and inferencing, effectively lowering barriers to entry for startups and companies operating on tight budgets. With significantly reduced costs to enter the market, hundreds of startups and small-cap companies may accelerate the development of AI products and solutions with practical, mass-market use cases. If successful, we could witness the rise of an entirely new cohort of winners. With that in mind, the key takeaway for readers is that this may be the right time to look for potential second-wave AI winners – particularly among small-cap companies with market capitalizations under $5 billion.
Also, macroeconomic conditions may become more favorable in the coming quarters, further supporting smaller-cap companies. Despite the Fed keeping interest rates steady at the latest FOMC meeting, we believe that deteriorating GDP growth forecasts from the Atlanta Fed – driven by early Trump 2.0 policies – may increase the likelihood of interest rate cuts in upcoming meetings. This view is reinforced by the impending public debt rollover, which may need to be financed at lower interest rates to maintain the US debt servicing capacity at reasonably healthy levels. Lower interest rates are generally favorable for small caps, as they reduce financing costs and support capital allocation toward growth projects.
Our Methodology
For this article, we used Finviz to screen for technology stocks under a $5 billion market cap. Although small-cap stocks typically have a market cap under $2 billion, we included companies below $5 billion to add more AI firms. We then manually selected companies that have significant revenue exposure or potential growth opportunities related to AI products & solutions. Finally, we compared the list with our proprietary Q4 2024 database of hedge funds’ ownership and included in the article the top 15 stocks with the largest number of hedge funds that own the stock.
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).
15. DXC Technology Company (NYSE:DXC)
Number of Hedge Fund Holders: 24
DXC Technology Company (NYSE:DXC) is a global provider of IT services and solutions, specializing in digital transformation, IT modernization, cloud computing, cybersecurity, analytics, and business process outsourcing. The company serves clients across multiple industries, including financial services, healthcare, insurance, manufacturing, public sector, and transportation. Its core offerings include consulting, systems integration, software development, application management, infrastructure services, and data-driven analytics. DXC is actively expanding its capabilities in AI, providing AI-driven solutions, automation platforms, and advanced analytics, positioning itself for potential growth opportunities in the expanding AI market.
DXC Technology Company (NYSE:DXC) delivered strong Q3 performance with revenue, adjusted EBIT margin, and non-GAAP EPS exceeding guidance. The company’s financial metrics showed total revenue declined 4.2% YoY on an organic basis, while adjusted EBIT margin expanded 140 basis points year-over-year to 8.9%, and non-GAAP diluted EPS grew 7% YoY to $0.92. The company demonstrated significant improvement in bookings with a book-to-bill ratio of 1.3x, the highest in 8 quarters, reflecting the success of their revamped go-to-market approach. The pipeline continues to grow with a higher mix of deals in consulting and engineering services, though these engagements have less near-term revenue impact but build a foundation for future growth.
DXC Technology Company (NYSE:DXC) is actively investing in AI capabilities, as evidenced by new partnerships with SAP and ServiceNow, and successful implementations for clients like Singapore General Hospital and Ferrari. The company faces ongoing global uncertainties including trade policy, geopolitical conflicts, inflation, and labor costs which continue to pressure corporate spending for discretionary projects, while clients balance cost optimization with investments in AI-driven transformation programs. Looking ahead, DXC’s top priority remains driving profitable and sustainable revenue growth, with a focus on establishing a culture grounded in client centricity, performance management, and accountability. With 24 hedge funds owning the stock, DXC is one of the best small cap AI stocks to buy right now.
14. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 25
C3.ai, Inc. (NYSE:AI) is an enterprise software company specializing in AI solutions designed to support digital transformation and operational optimization across various industries. Its flagship product, the C3 AI Platform, provides a comprehensive, scalable environment for developing, deploying, and managing enterprise-grade AI applications. The company primarily serves sectors such as energy, manufacturing, finance, defense, healthcare, and telecommunications. Its solutions leverage machine learning, advanced analytics, predictive maintenance, and AI-driven insights to enhance efficiency, reduce costs, and improve decision-making. With AI central to its entire product portfolio, the company is positioned to capitalize directly on growth opportunities in the rapidly expanding AI market.
C3.ai, Inc. (NYSE:AI) demonstrated strong financial performance in Q3 FY2025, with total revenue reaching $98.8 million, representing a 26% YoY increase, while subscription revenue grew 22% to $85.7 million. The company has significantly expanded its strategic partnerships, notably with Microsoft, AWS, and McKinsey QuantumBlack, which has dramatically increased its global distribution capacity. The Microsoft partnership has been particularly successful, with 28 agreements closed across 9 different industries since the announcement, marking a 460% increase QoQ, and sales cycles shortened by nearly 20%. The company’s joint qualified sales pipeline with Microsoft has surged 244% YoY as they pursue 621 target accounts.
C3.ai, Inc. (NYSE:AI)’s focus on generative AI has shown strong traction, with 20 C3 generative AI pilots closed with clients including Mars, Liberty Coca-Cola Beverages, and the US Department of Defense. Looking ahead, the company is well-positioned for sustained growth with all solutions now immediately orderable on Microsoft, AWS, and Google Cloud portals, significantly shortening sales cycles. Management has provided revenue guidance for Q4 FY2025 of $103.6 million to $113.6 million, with the full fiscal year 2025 revenue expected to range between $383.9 million to $393.9 million. With 25 hedge funds owning the stock, AI is one of the best small cap AI stocks to buy right now.
13. Insight Enterprises, Inc. (NASDAQ:NSIT)
Number of Hedge Fund Holders: 26
Insight Enterprises, Inc. (NASDAQ:NSIT) is a global technology solutions provider focused on helping businesses manage and transform their IT environments. The company offers a broad range of services including IT procurement, cloud and data center transformation, digital innovation, cybersecurity, and managed services. Insight serves clients in sectors such as healthcare, education, government, and commercial enterprises, primarily across North America, EMEA, and APAC regions. NSIT is actively incorporating AI into its offerings, including AI-powered analytics, automation, and digital innovation services, presenting opportunities for growth in enterprise AI adoption.
Insight Enterprises, Inc. (NASDAQ:NSIT) delivered Q4 2024 results consistent with expectations, with gross profit up 1% driven by a 12% increase in Insight core services and modest growth in hardware and cloud. The company saw hardware gross profit growth for the first time in 8 quarters, particularly in devices, and expects client buying patterns to build during 2025. For the full year 2024, despite a 5% decline in net revenue to $8.7 billion, the company increased gross profit by 6% and expanded gross margin by 210 basis points to 20.3%. Cloud gross profit grew 21% to $484 million, reflecting higher growth in SaaS and Infrastructure as a Service. The company generated a strong cash flow from operations of $633 million compared to $620 million in 2023.
Looking ahead to 2025, Insight Enterprises, Inc. (NASDAQ:NSIT) expects hardware gross profit to grow in mid-single digits, with Insight Core Services gross profit growth within their long-term guidance range of 16% to 20%. The company anticipates cloud to be flat to slightly down due to the decline of enterprise agreements and pivot to corporate and mid-market space, with an approximate $70 million impact from Google Enterprise Resale and Microsoft enterprise agreements. With 26 hedge funds owning the stock, NSIT is one of the best small cap AI stocks to buy right now.
12. Clear Secure, Inc. (NYSE:YOU)
Number of Hedge Fund Holders: 27
Clear Secure, Inc. (NYSE:YOU) is a technology company that provides identity verification and access control solutions through its secure biometric platform. Its core offering, CLEAR Plus, enables expedited entry at airports by using fingerprint and iris recognition to verify identities. The company also offers digital identity tools for venues, stadiums, and other businesses, expanding its platform into areas such as health pass verification and age validation. YOU operates across the travel, sports, entertainment, and healthcare industries, with partnerships spanning major US airports and event venues. The company leverages AI to enhance biometric matching, fraud detection, and real-time identity verification, supporting future expansion into AI-driven security and identity solutions.
The year 2024 was transformational for Clear Secure, Inc. (NYSE:YOU) as the company’s momentum accelerated in bringing its secure identity platform to more people in more places. The company achieved significant operational milestones, with CLEAR Plus now covering approximately 73% of airport volume through 166 lanes nationwide. The implementation of NextGen Identity has improved customer experience substantially, with 50% of members getting through CLEAR lanes in less than 2 minutes, 85% in under 5 minutes, and 91% in less than 7 minutes. The company’s EnVe rollout, which is expected to be complete by March, is delivering significant operational efficiencies by serving members with 30% fewer pods while being 5x faster.
In terms of financial performance, Q4 revenue, and total bookings grew 21% and 17% respectively, driven by member growth, pricing, strong member retention, and improvements in win-back activity. Clear Secure, Inc. (NYSE:YOU) achieved a 24% full-year adjusted EBITDA margin, representing an improvement of over 1,000 basis points year-over-year. Total cumulative enrollments reached 28.9 million by year-end, with a record growth of 2.5 million in the quarter. Looking ahead to 2025, management expects another year of strong top-line growth, continued margin expansion, and free cash flow of at least $310 million. The company is also making strong progress with its emerging businesses, including TSA PreCheck and CLEAR1, which are contributing to total bookings and gross profit dollar growth. With 27 hedge funds owning the stock, YOU is one of the 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.
10. IonQ, Inc. (NYSE:IONQ)
Number of Hedge Fund Holders: 28
IonQ, Inc. (NYSE:IONQ) is a quantum computing company that develops and operates quantum computers based on trapped-ion technology. Its systems are accessible through major cloud platforms and are designed to solve complex problems beyond the capabilities of classical computers. The company offers both hardware and software solutions, including a proprietary operating system and quantum programming tools. IONQ’s technology is closely tied to AI, as quantum computing is expected to accelerate AI model training and optimization, positioning the company to benefit from the convergence of AI and quantum computing. The US-based company ranked 6th on our recent list of 11 Best Quantum Computing Stocks to Buy Right Now.
IonQ, Inc. (NYSE:IONQ) has established itself as a commercial leader in quantum computing since its IPO, with a focus on building a rich and deep ecosystem. The company’s Forte system currently operates with 36 algorithmic qubits, and they plan to announce an AQ 64 system by year-end, which will be 270,000,000 times more powerful than the current Forte system. IONQ differentiates itself through its room-temperature quantum computing solution, which requires only the space of two refrigerators and connects to a standard wall socket, making it more practical and energy-efficient than competitors. The company has secured significant partnerships, including a $94.5 million contract with the Air Force Research Lab for systems and networks. IonQ’s portfolio includes both quantum computing and networking capabilities, with approximately 933 patents (400 in networking, 500 in computing).
IonQ, Inc. (NYSE:IONQ) has demonstrated commercial success through partnerships with major organizations like AstraZeneca for drug discovery, General Dynamics for anomaly detection, Ansys for computational engineering, and Airbus for logistics. For fiscal year 2024, IonQ has provided revenue guidance of $75 million to $95 million, with expectations to achieve nine figures in GAAP revenue the following year. The company’s quantum networking initiatives have expanded through acquisitions, including IDQ, which brings relationships with key partners like SingTel, SK Telecom, and JP Morgan. With 28 hedge funds owning the stock, IONQ is one of the best small cap AI stocks to buy right now.
9. Workiva Inc. (NYSE:WK)
Number of Hedge Fund Holders: 28
Workiva Inc. (NYSE:WK) is a cloud-based software company that provides a platform for connected reporting, compliance, and data management. Its solutions help businesses streamline complex processes involving financial reporting, regulatory filings, audit management, and ESG disclosures. WK serves a wide range of industries, including finance, energy, government, and healthcare, with a focus on large enterprises and public companies. The platform integrates with various data sources and enterprise systems to enable real-time collaboration, transparency, and accuracy in reporting. WK incorporates AI and machine learning features to automate data linking, detect anomalies, and enhance compliance workflows, supporting efficiency gains and future growth in AI-driven reporting solutions.
Workiva Inc. (NYSE:WK) delivered strong financial results in Q4 2024, with subscription revenue growth of 22% and total revenue growth of 20% compared to Q4 2023. For the full year 2024, the company exceeded revenue guidance with 20% subscription revenue growth and 17% total revenue growth. The company demonstrated improved profitability with a non-GAAP operating margin of 4.3%, up from 1.6% in 2023, while delivering a full-year free cash flow margin of 11.7%. Business fundamentals showed strength with the net retention rate improving to 112%, while contracts valued over $300,000 increased 34% and those over $500,000 increased 32% compared to Q4 2023. The company’s global expansion efforts proved successful, with 17.5% of 2024 total worldwide revenue coming from outside the Americas, representing a 280 basis point improvement from 2023.
Workiva Inc. (NYSE:WK)’s platform strategy continued to resonate in the market, with multi-solution deals becoming the norm rather than the exception. WK’s assured integrated reporting platform, which includes carbon accounting, has been recognized as the only platform that combines financial reporting, sustainability, and governance risk and compliance in one secure, controlled, and audit-ready environment. Looking ahead to 2025, management has guided for 20% subscription revenue growth and expects non-GAAP operating margin to range from 5% to 5.5%, demonstrating continued focus on both growth and improved productivity.
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.
7. nCino, Inc. (NASDAQ:NCNO)
Number of Hedge Fund Holders: 33
nCino, Inc. (NASDAQ:NCNO) is a financial technology company that provides a cloud-based operating system for banks and credit unions, aimed at improving efficiency, compliance, and customer experience. Built on the Salesforce platform, NCNO’s solutions cover loan origination, account opening, deposit operations, credit analysis, and portfolio management. The company supports digital transformation in financial services by automating workflows, integrating data, and enhancing transparency. NCNO incorporates AI and machine learning through its nCino IQ offering, enabling predictive analytics, risk assessment, and process automation to drive smarter, faster decision-making in banking operations.
nCino, Inc. (NASDAQ:NCNO) has evolved significantly since its IPO in 2020, expanding from primarily a commercial lending platform to building a comprehensive single platform across banking services. The company demonstrated strong performance in recent quarters, with significant bottom-line overperformance and successful signing of major deals, including their largest customer in Japan and a top 40 bank in the US for commercial services. The company’s international business currently represents 21% of overall revenue, with an established presence in key markets including the UK, Canada, and New Zealand.
nCino, Inc. (NASDAQ:NCNO) is implementing a new platform pricing model, moving away from seat-based pricing to asset-based pricing for consumer lending and loan-based pricing for mortgage services, which is expected to provide opportunities for in-contract revenue growth. The company has demonstrated strong margin performance, achieving a 20% margin threshold in Q3, while maintaining focus on growth opportunities within their $19 billion SAM. Despite challenges in the mortgage market, the company has positioned itself for long-term success through product expansion, geographic growth, and technological advancement with initiatives like banking adviser and Gen AI integration.
6. Asana, Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 33
Asana, Inc. (NYSE:ASAN) is a work management software company that offers a cloud-based platform designed to help teams plan, organize, and track projects and tasks. Its solution supports collaboration, workflow automation, goal tracking, and reporting across departments such as marketing, operations, product development, and IT. The platform integrates with numerous third-party tools and emphasizes scalability and real-time visibility. ASAN leverages AI to enhance productivity through features like smart task prioritization, automated workflows, and predictive project insights, aligning with the growing demand for AI-driven workplace efficiency tools. The company ranked eighth on our recent list of Top 9 AI Stocks to Watch Amid DeepSeek Frenzy.
Asana, Inc. (NYSE:ASAN) delivered solid Q4 results with total revenues up 10% YoY, exceeding guidance when adjusted for currency impact. The company achieved significant milestones including reaching positive free cash flow for the full fiscal year 2025 and improving non-GAAP operating margins by over 800 basis points year-over-year. Non-tech verticals showed strong performance, growing 15% YoY, with manufacturing, energy, consumer retail, and media being among the fastest-growing sectors. The company made substantial progress in enterprise customer acquisition, with $100,000+ customers growing 20% YoY and showing acceleration from the previous quarter. The company’s AI Studio has shown promising early results, with hundreds of the largest customers actively running smart workflows and thousands of customers enabling the platform.
Looking ahead, Asana, Inc. (NYSE:ASAN) expects to reach non-GAAP profitability in Q1 and projects fiscal year 2026 revenues of $782 million to $790 million, representing 8% to 9% growth. The company anticipates continued margin expansion with a non-GAAP operating margin of at least 5% for fiscal year 2026. International markets remain a key strength, with international revenue growing 14% YoY and showing acceleration from the previous quarter. The company is implementing strategic changes including reallocating resources to optimize capacity across segments, expanding channel presence, and building out a dedicated AI Studio team. Management expects ARR growth to outpace revenue growth in fiscal year 2026, setting up potential revenue growth acceleration in fiscal year 2027. With 33 hedge funds owning the stock, ASAN is one of the best small cap AI stocks to buy right now.
5. BlackLine, Inc. (NASDAQ:BL)
Number of Hedge Fund Holders: 34
BlackLine, Inc. (NASDAQ:BL) is a software company that provides cloud-based solutions for automating and streamlining finance and accounting operations. Its platform focuses on key processes such as financial close, account reconciliation, intercompany accounting, and compliance management. BL primarily serves mid-size to large enterprises across various industries, including manufacturing, retail, healthcare, and financial services. The platform integrates with major ERP systems, enabling real-time data access and improved accuracy in financial reporting. BL incorporates AI and machine learning to support anomaly detection, transaction matching, and predictive analytics, offering opportunities for enhanced automation and efficiency in financial workflows.
BlackLine, Inc. (NASDAQ:BL) announced a 7% headcount reduction, primarily affecting go-to-market roles including BDRs, quota-carrying reps, customer success, and professional services teams. The company is implementing significant strategic changes, including a new pricing model shifting from seat-based to platform-based pricing with revenue bands and consumption metrics. BL has set a target model of 13% to 16% total revenue growth and operating margins of 26% to 30%. Several key initiatives are driving growth, including FedRAMP compliance investments for federal government opportunities, expansion in Saudi Arabia with SAP, and significant growth in India operations from 20 to 220 people.
BlackLine, Inc. (NASDAQ:BL) has strengthened its partnership with SAP through improved compensation alignment, the establishment of a catalyst group, and the implementation of data-sharing capabilities between platforms. The company launched Studio360, a comprehensive platform with five components – Integrate, Orchestrate, Visualize, Control, and Blueprint – built on a modern data architecture in partnership with Snowflake. Management issued 2025 guidance of 7-8% growth which reflects expectations of stronger performance in the second half of the year, driven by these strategic initiatives. The pipeline includes record levels of 7-8 figure deals, particularly focused on broader sales at larger companies.
4. Impinj, Inc. (NASDAQ:PI)
Number of Hedge Fund Holders: 37
Impinj, Inc. (NASDAQ:PI) is a technology company specializing in RAIN RFID (Radio-Frequency Identification) solutions that connect physical items to digital systems. Its platform includes RFID tags, readers, and software designed to track and manage inventory, assets, and shipments in real-time. The company’s solutions integrate with enterprise systems to support applications like item-level inventory management and asset tracking. PI is exploring AI to enhance data analytics, automate decision-making, and enable intelligent edge processing, supporting future growth in smart supply chains and IoT environments.
Impinj, Inc. (NASDAQ:PI) achieved its fourth consecutive year of double-digit revenue growth in 2024, with total revenue reaching $366.1 million, representing a 19% YoY increase. The company demonstrated strong market performance in retail apparel, general merchandise, and supply chain and logistics, with endpoint IC unit volumes growing 34% over 2023. Two major market catalysts emerged in 2024: the initiation of item-level food tagging and the introduction of Impinj Gen2X, which significantly expanded enterprise solution capabilities. However, the company faces near-term challenges, including geopolitical uncertainty, tariffs, changes in label-partner share allocations, aggressive label price shopping, and shorter ordering cycles that have disrupted partner bookings.
Despite these temporary headwinds, Impinj, Inc. (NASDAQ:PI) maintains a strong E-family reader IC order book across all large partners and geographies. Looking forward, management anticipates solid industry RAIN label expansion in 2025, driven by growth in retail apparel, general merchandise, and supply chain and logistics, supported by modest but growing food volumes. BL is engaged with two large grocery chains, with potential endpoint IC unit volumes larger than any previous program. The company delivered record adjusted EBITDA and EPS, successfully resolved patent litigation, and maintained its market-leading position through product innovation.
3. AvePoint, Inc. (NASDAQ:AVPT)
Number of Hedge Fund Holders: 40
AvePoint, Inc. (NASDAQ:AVPT) is a software company that provides data management and governance solutions for Microsoft 365, SharePoint, Teams, and other collaboration platforms. Its cloud-based offerings support data protection, compliance, access control, migration, and records management for organizations across sectors including government, education, healthcare, and financial services. AVPT integrates AI into its platform to automate policy enforcement, detect anomalies, and enhance data classification and compliance, positioning it to benefit from the growing demand for AI-driven data governance and security solutions.
AvePoint, Inc. (NASDAQ:AVPT) has demonstrated a strong market presence with 25,000 customers globally and processes over 500 petabytes of data daily. The company has achieved significant financial milestones, with 89% gross revenue retention and guidance for 25% ARR growth next year. AVPT has set an ambitious target of reaching $1 billion in ARR by 2029, supported by multiple growth vectors including SMB segment expansion, Google partnership, and enterprise growth. The company maintains strong geographical diversification with 45% recurring revenue from North America, 30% from EMEA, and the remainder from APAC.
With the rise of Gen AI, AvePoint, Inc. (NASDAQ:AVPT)’s platform has become increasingly relevant as companies need to properly govern, ensure quality, and manage access control and lifecycle management of AI-generated data. The company maintains a strong balance sheet, achieving GAAP profitability ahead of schedule and generating $85 million in cash flow last year. With 40 hedge funds owning the stock, AVPT is one of the best small cap AI stocks to buy right now.
2. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Holders: 51
ZoomInfo Technologies Inc. (NASDAQ:ZI) is a software company that provides a cloud-based go-to-market intelligence platform for sales, marketing, and recruiting professionals. Its platform offers data-driven tools for lead generation, account targeting, contact enrichment, and buyer intent analysis, helping businesses improve customer acquisition and engagement. ZI aggregates and curates vast amounts of business data and integrates with CRM and marketing automation systems. The company leverages AI and machine learning to enhance data accuracy, recommend prospects, and automate workflows, enabling more efficient and intelligent go-to-market strategies. The US-based company ranked fifth on our recent list of 12 Best Nasdaq Stocks Under $20 to Buy Now.
ZoomInfo Technologies Inc. (NASDAQ:ZI) demonstrated stabilization and improvement in Q4, driven by foundational changes in their go-to-market strategy initiated in Q2 and innovation through their Copilot AI platform. The company’s OperationsOS and DaaS segments showed strong performance, growing 27% YoY. A significant strategic shift has been the focus on the upmarket business, which now represents 70% of revenue while implementing measures to create a smaller but healthier downmarket segment. The company’s Copilot platform has seen remarkable adoption, reaching $150 million in ACV in Q4, up from just $18 million in Q2. The platform’s success is particularly evident in expanding to new user personas, with thousands of account managers now using Copilot at usage rates comparable to traditional SDR users.
ZoomInfo Technologies Inc. (NASDAQ:ZI)’s competitive advantage stems from its comprehensive data assets, including accurate contact information, intent data, and a strong compliance and regulatory posture. Looking forward, the company is focused on improving retention rates through Copilot adoption, continuing the upmarket shift, and maintaining strong cash flow generation. A significant product launch is planned for May 2025, which is expected to drive upmarket momentum, particularly in the OperationsOS product.
1. BILL Holdings, Inc. (NYSE:BILL)
Number of Hedge Fund Holders: 64
BILL Holdings, Inc. (NYSE:BILL) is a financial technology company that provides cloud-based software for automating back-office financial operations for small and mid-sized businesses. Its platform streamlines processes such as accounts payable, accounts receivable, expense management, and payments. The company enables integration with major accounting software platforms, facilitating real-time visibility and improved cash flow management. BILL incorporates AI to automate data entry, detect errors, and optimize payment workflows, supporting greater efficiency and scalability in financial operations.
BILL Holdings, Inc. (NYSE:BILL) has demonstrated significant growth, having increased revenue by over 10x in the last 5 years and currently approaching $1.5 billion in revenue. The company has defined and leads the financial operations category, with approximately 0.5 million businesses on their platform and processes about 1% of US GDP. The company’s market opportunity remains substantial with over 6 million potential business customers in the US that have employees. BILL’s competitive advantages stem from its payment engine capabilities, processing transactions across 8 different payment modalities and 12 different payment rails with a fraud loss rate of less than 1 basis point. The company has demonstrated strong financial performance with free cash flow consistently around 20% and has grown ex-float operating income from 1% two years ago to 7% in the second quarter.
BILL Holdings, Inc. (NYSE:BILL) is making strategic investments of $45 million in fiscal year 2025 across four key areas: expanding payment solutions, improving large supplier experience, deepening relationships with accounting firms, and driving expansion in embedded solutions. The company is leveraging AI capabilities to enhance its platform, utilizing its extensive data set of millions of weekly documents and billions in weekly payment flows. Looking forward, management remains confident in achieving multiple years of 20% growth, driven by their massive market opportunity, cross-selling capabilities, and new payment product innovations.
Overall BILL Holdings, Inc. (NYSE:BILL) ranks first on our list of the 15 best small cap AI stocks to buy right now. While we acknowledge the potential of BILL as an investment, our conviction lies in the belief that 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 BILL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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