5 Best Small Cap AI Stocks To Buy Now

In this piece, we will take a look at the 5 best small-cap AI stocks to buy. For more AI stocks in our selection and an in-depth analysis of AI and its effects on the global technological sphere, head on over to 10 Best Small Cap AI Stocks To Buy Now.

5. BigBear.ai Inc. (NYSE:BBAI)

Market Capitalization as of July 29: $287.37 million

Number of Hedge Fund Holders: 15

Headquartered in Columbia, Maryland, BigBear.ai Inc. (NYSE:BBAI) stands as an IT services management firm specializing in AI and machine learning solutions for decision support. The company’s cutting-edge AI-powered products and services find application across various domains, including global supply chains and logistics, autonomous systems, and the cyber market. On July 26, the company secured a lead role on the U.S. Army’s digital transformation program. This project was granted to BigBear.ai through a single award OTA (Other Transaction Authority) contract valued at approximately $7.76 million and will be executed over a period of 9 months.

Our hedge fund data shows 15 funds holding stakes in BigBear.ai Inc. (NYSE:BBAI) in the first quarter, with a total stake value of $6.01 million.

4. Domo, Inc. (NASDAQ:DOMO)

Market Capitalization as of July 29: $617.08 million

Number of Hedge Fund Holders: 18

Headquartered in Silicon Slope, Utah, Domo, Inc. (NASDAQ: DOMO) operates as a prominent cloud software company, focusing on business intelligence tools and data visualization solutions. Domo, Inc. (NASDAQ:DOMO)’s AI Service Layer simplifies the process of managing, deploying, and enhancing AI and ML models, including Large Language Models (LLMs), to optimize users’ data experiences. The platform offers a wide range of capabilities, from generative AI and natural language processing for tasks like text generation and SQL queries to audio transcription and text translation.

As of Q1 2023, Domo, Inc. (NASDAQ:DOMO) shares were held by 18 of the 943 hedge funds tracked by Insider Monkey, with a total value of $59 million. D E Shaw was the largest hedge fund shareholder with ownership of 0.64 million shares valued at $9.2 million.

3. Mitek Systems, Inc. (NASDAQ:MITK)

Market Capitalization as of July 29: $459.31 million

Number of Hedge Fund Holders: 19

Mitek Systems, Inc. (NASDAQ:MITK) is a software company that specializes in digital identity verification and mobile image processing using artificial intelligence. The company’s software is used for depositing checks and opening bank accounts via mobile devices.

On July 3, 2023, Scott Buck, an analyst at HC Wainwright & Co., restated his optimistic view on Mitek Systems, Inc. (NASDAQ:MITK) and upheld a Buy rating for the company’s stock. However, he revised the stock’s price target from $22 to $19.

At the end of Q1 2023, Mitek Systems, Inc.’s (NASDAQ:MITK) was held by 19 hedge funds, up from 13 in the previous quarter. Ben Gordon’s Blue Grotto Capital, the company’s largest shareholder, was long over 4.13 million shares of Mitek Systems, Inc. (NASDAQ:MITK).

2. SES AI Corporation (NYSE:SES)

Market Capitalization as of July 29: $1.07 billion

Number of Hedge Fund Holders: 19

Established in 2012, SES AI Corporation (NYSE:SES) is a comprehensive Li-Metal battery manufacturer with significant expertise in material, cell, module, AI-powered safety algorithms, and recycling. Formerly known as SolidEnergy Systems, the company’s headquarters are based in Boston, and it maintains operational facilities in Singapore, Shanghai, and Seoul.

Earlier this May, SES AI Corporation (NYSE:SES) revealed its plans to establish Line 4, which is set to become the company’s most advanced and next-generation Li-Metal cell manufacturing line. This development comes after the successful establishment of three A-sample lines last year – one in Shanghai, China, and two in Cheongchungbuk-do, South Korea.

During the first quarter of 2023, SES AI Corporation (NYSE: SES) appeared in the 13F holdings of 19 hedge funds, collectively holding a stake with a total value of $12.5 million.

1. Nerdy Inc. (NYSE:NRDY)

Market Capitalization as of July 29: $811.22 million

Number of Hedge Fund Holders: 22

Nerdy Inc. (NYSE:NRDY) is an education technology company that provides online learning services and resources. Formerly known as “Varsity Tutors,” Nerdy Inc. (NYSE:NRDY) offers a platform where students can access personalized tutoring, test preparation, homework help, and other educational content across a wide range of subjects. By leveraging AI, the company can match each student with the ideal tutor, tailoring the selection to their individual requirements. Furthermore, in early 2023, Nerdy Inc. (NYSE:NRDY) revealed its plans to introduce two new AI-driven products and integrate ChatGPT into its services.

Insider Monkey’s database of 943 hedge funds shows that 22 hedge funds had stakes in Nerdy, Inc. (NYSE:NRDY) as of the end of the first quarter.

Here is what Baron Opportunity Fund has to say about Nerdy, Inc. (NYSE:NRDY) in its Q4 2021 investor letter:

“Nerdy Inc. operates a digital learning platform in the U.S. that provides live online tutoring in multiple formats, including one-on-one and small-to-large groups. The offering includes K-12 courses, college, professional, GMAT, SAT, and other prep. Though bookings for future classes remained healthy, many sessions were delayed from the fourth quarter as families opted to take longer holiday trips and kids resumed afterschool activities, making it more difficult to schedule tutoring, resulting in weaker-than-projected recognized revenues. Given near-term uncertainty, a short-term tax loss, and other investment opportunities, we chose to exit the position.”

See also 15 Best Artificial Intelligence (AI) Stocks to Buy and The Future of Artificial Intelligence.