It’s clear that AI holds immense promise but it comes with significant risks. Some of the concerns that the market has include overreliance on a few key players, shifts in demand toward smaller competitors, and the broader impact of AI-driven market trends on earnings and valuations. While AI offers opportunities, managing risks such as customer concentration, economic headwinds, and market volatility will be crucial for its sustainable growth and integration.
Navigating AI Expectations and Market Dynamics
On CNBC ‘Fast Money,’ a discussion between traders highlighted concerns about elevated expectations for AI, especially in the chip market, with NVDA as a prime example. Past patterns in the semiconductor giant’s stock suggest potential declines, with customer concentration being a significant risk. Some believe demand for high-end chips could shift to smaller semiconductor companies. They also discussed that broader market performance might improve as other sectors gain traction, especially during earnings season, which is expected to influence investor sentiment more than AI and GLP-1 trends.
They mentioned that the key risks for earnings include the strong U.S. dollar, rising rates, and policy uncertainties, which may impact large-cap companies. While recent PPI data offered some relief, the bond market remains firm, with 10-year yields approaching 5%. Expectations for CPI and PCE figures are mixed, with potential reacceleration seen as a headwind for markets in a higher rate environment. Earnings and economic data were considered critical factors to watch by the traders.
A computer screen showcasing Artificial Intelligence and Machine Learning algorithms at work.
Our Methodology
For this article, we scoured our database as well as several ETFs and media reports to find all possible AI stocks under $2 billion. We then listed the stocks in ascending order of their market cap. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of 900 hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
59. Ontrak, Inc. (NASDAQ:OTRK)
Market Capitalization: $7.3 Million
Number of Hedge Fund Holders: N/A
Ontrak, Inc. (NASDAQ:OTRK) is a telehealth and AI-driven healthcare company that offers services aimed at improving the management of chronic conditions. Its technology platform identifies individuals whose chronic diseases could improve through behavior changes, suggests effective care paths, and helps guide them through the necessary care. The OnTrak program addresses conditions such as diabetes, hypertension, and heart disease by combining medical and psychosocial interventions through in-person or telehealth channels, along with care coaching and community care coordination.
On January 8, Ontrak, Inc. (NASDAQ:OTRK) announced an agreement to offer its behavioral health solutions to Intermountain Health’s Medicare Advantage members in Nevada. The company will provide its AI-powered Wholehealth+ solution, which identifies high-risk members with chronic conditions and unaddressed behavioral health issues.
The solution engages these members with care coaching and facilitates access to timely treatment, aiming to improve clinical outcomes and reduce costs. The agreement is expected to add around 2,000 members to Ontrak’s outreach pool starting in mid-February 2025.
58. T Stamp Inc. (NASDAQ:IDAI)
Market Capitalization: $9.9 Million
Number of Hedge Fund Holders: 3
T Stamp Inc. (NASDAQ:IDAI) specializes in identity authentication solutions for government, enterprise, and peer-to-peer markets globally. The company uses artificial intelligence, machine learning, biometrics, cryptography, and data mining to detect and prevent identity fraud, safeguard sensitive data, and improve digital service accessibility. Its technology combines Irreversibly Transformed Identity Token and various biometric or identifying data sources.
On January 6, T Stamp (NASDAQ:IDAI) announced a strategic partnership with Qenta Inc. As part of the agreement, Qenta is spinning off its Goldstar KYC technology into a new subsidiary, QID Technologies LLC, with Trust Stamp holding a 10% stake in the new entity. Trust Stamp has also granted QID a non-exclusive license for its AI-powered identity technologies in exchange for a $1 million license fee, payable in three installments over Q1 2025.
Additionally, QID will contract with Trust Stamp for business and product development services related to identity and privacy solutions, with monthly service fees starting January 1, 2025, capped at $3.6 million annually. As a 10% shareholder in QID, Trust Stamp expects to receive a net cash inflow of $3.3 million from the projected $3.6 million in billed revenue.
57. Iveda Solutions, Inc. (NASDAQ:IVDA)
Market Capitalization: $11.5 Million
Number of Hedge Fund Holders: 3
Iveda Solutions, Inc. (NASDAQ:IVDA) offers cloud-based video AI search and surveillance technologies designed to safeguard people, places, and assets. The company’s solutions integrate instant intelligence into existing infrastructure, supporting the digital transformation of cities globally. By using IoT platforms with smart sensors and devices, Iveda addresses public safety, security, elderly care, energy efficiency, and environmental preservation.
Iveda (NASDAQ:IVDA) concluded 2024 with five major product launches, including LevelNOW™, IvedaAI™ Forensics Desk, IvedaAI™ Cloud, IvedaESS, and VEMO to improve AI and IoT-powered solutions for industries like security, retail, and law enforcement. LevelNOW™ monitors liquid storage with patented sensors, while IvedaAI™ Cloud offers cost-effective video analytics. The Forensics Desk aids law enforcement with facial recognition and video search, and IvedaESS provides portable surveillance for temporary needs. VEMO integrates AI with wearable body cameras, featuring real-time analytics.
Furthermore, Iveda previewed an upgraded IvedaAI™ platform, integrating object recognition with Large Language Models and Vision Language Models, scheduled for full rollout in Spring 2025.
56. Webuy Global Ltd (NASDAQ:WBUY)
Market Capitalization: $12.45 Million
Number of Hedge Fund Holders: 1
Webuy Global Ltd (NASDAQ:WBUY) is an e-commerce company serving Southeast Asia, providing a wide range of products such as food, beverages, personal care items, and travel packages. The company is increasingly incorporating AI-powered solutions to enhance its operations.
In late December 2024, Webuy (NASDAQ:WBUY) highlighted the success of its Disney cruise campaign, driven by its Micky1.0 Travel AI on WhatsApp. The campaign employed Webuy’s digital marketing expertise to direct leads to Micky1.0, which efficiently handled customer inquiries, provided real-time quotes, and offered personalized recommendations before passing qualified leads to travel consultants for deal closure. From December 10th to 23rd, 2024, the Disney cruise campaign achieved the following financial results: Receivable Booking Value (RBV) of SGD 465,527 and Booking Revenue of SGD 162,202.
55. Gaxos.ai Inc. (NASDAQ:GXAI)
Market Capitalization: $13.05 Million
Number of Hedge Fund Holders: 1
Gaxos.ai Inc. (NASDAQ:GXAI) develops AI applications across sectors such as mental and physical wellness, coaching, and gaming. Its offerings include Gaxos, a gaming platform that designs, acquires, and manages traditional games while integrating unique game mechanisms. Formerly known as The NFT Gaming Company, Inc., the company rebranded to Gaxos.ai in January 2024, with a mission to reshape the interaction between humans and AI. Its focus extends to advancing health, longevity, and entertainment through innovative AI solutions.
In December 2024, Gaxos.ai (NASDAQ:GXAI) announced the successful integration of Meshy 4 into its AI solution for game developers and publishers, Gaxos Labs. The Meshy 4 update improves the platform, enabling artists, designers, and developers to refine mesh topology, control polycounts, and generate high-quality 3D models more efficiently. With Meshy 4’s advanced generative geometry, users can easily switch between quad- or triangle-based meshes to meet the specific requirements of their projects.
54. Datasea Inc. (NASDAQ:DTSS)
Market Capitalization: $15 Million
Number of Hedge Fund Holders: N/A
Datasea Inc. (NASDAQ:DTSS) provides innovative products and solutions in two key sectors: acoustic high-tech and 5G-AI multimodal digitalization. The company’s advanced R&D infrastructure supports its offerings, including a cloud platform powered by AI for its 5G multimodal digital segment. Datasea uses cutting-edge technologies like ultrasonic and directional sound to address virus prevention and human infection control, while also exploring applications in medical ultrasonic cosmetology.
In November 2024, Datasea (NASDAQ:DTSS) announced that it expects its revenue for the fiscal year ending June 30, 2025, to reach around $90 million, a significant increase of 275% from $24 million in fiscal year 2024. By October 31, 2024, the company had already earned approximately $31.7 million in the first four months of fiscal 2025, including $21.1 million in the first quarter and $10.6 million in October 2024.
CEO Zhixin Liu attributed the growth mainly to strong performance in its 5G digital applications business, which has benefitted from large contracts. The company also reported progress in its acoustic high-tech sector, with high-margin products aimed at promoting healthy living environments. Datasea’s AI-driven technologies provide a competitive edge across both business segments.
53. Bridgeline Digital, Inc. (NASDAQ:BLIN)
Market Capitalization: $18.54 Million
Number of Hedge Fund Holders: 3
Bridgeline Digital, Inc. (NASDAQ:BLIN) is a marketing technology company that provides a range of products and services, including HawkSearch, Celebros Search, Woorank, and Bridgeline TruPresence. These solutions help businesses with site search, recommendations, personalization, SEO audits, and web content management. The company also offers tools like Bridgeline Unbound for managing digital experiences and OrchestraCMS for custom solutions on Salesforce.
Bridgeline (NASDAQ:BLIN) saw strong growth in fiscal 2024 as it signed over 75 new HawkSearch licenses and increased its Annual Contract Value to $6.2 million. HawkSearch now powers over 1,000 websites, including major clients like HP.com and CED. The platform’s success is credited to AI features like Smart Search and Generative AI. In fiscal Q1 2025, Bridgeline continued its momentum with new contracts, adding $2.5 million in new business. The company is expanding its B2B presence with clients such as Grizzly and JonDon, while advancing its AI capabilities, including Conversational Search and Smart Filters. Strategic partnerships with Optimizely, BigCommerce, and others further support its growth.
52. Soluna Holdings, Inc. (NASDAQ:SLNH)
Market Capitalization: $21.4 Million
Number of Hedge Fund Holders: 3
Soluna Holdings, Inc. (NASDAQ:SLNH) operates data centers focused on sustainability as it uses renewable energy and efficient hardware. The company specializes in compute-intensive tasks such as AI applications and cryptocurrency mining and provides AI cloud infrastructure that supports enterprise-level performance and scalability, helping innovators execute complex workloads while minimizing their environmental impact.
On January 6, Soluna (NASDAQ:SLNH) announced a new partnership with Atlas Cloud, a top provider of AI-powered video processing solutions which marked the second customer acquired through Soluna’s collaboration with Hewlett Packard Enterprise GreenLake and further strengthened its position in sustainable, high-performance AI computing.
Under the one-year agreement, the company will supply Atlas with 64 Nvidia H100 GPUs, with potential for expansion. This GPU cluster will support Atlas’s AI video processing tasks, delivering energy-efficient scalability and exceptional reliability. John Belizaire, CEO of Soluna, commented:
“Building on our first AI customer, this second engagement demonstrates the strength of our collaboration with HPE GreenLake. We’re proud to be powering Atlas’s advanced video processing workloads and expanding our reach in the AI ecosystem.”
51. DarioHealth Corp. (NASDAQ:DRIO)
Market Capitalization: $23 Million
Number of Hedge Fund Holders: 4
DarioHealth Corp. (NASDAQ:DRIO) is a digital health company focused on improving chronic condition management through its multi-condition digital therapeutics platform. The platform uses data analytics, AI, and personalized coaching to support diabetes, hypertension, musculoskeletal health, weight management, and behavioral health. By encouraging behavior change, Dario is focusing on empowering individuals and transforming digital healthcare. At the company’s Q3 2024 earnings call, the company’s Chief Commercial Officer, Steven Nelson said:
“With each client engagement, we are also gathering valuable insights that fuel our AI capabilities, enhancing both client experiences and clinical outcomes. As we look ahead, I am excited to build on our momentum, executing with precision and a relentless focus on sustainable long-term growth. Our road map is clear, and we are fully committed to driving transformative impact across the health care landscape, delivering enduring value for our clients and realizing our vision of a healthier, more connected world.”
The company’s CEO, Erez Raphael added:
“Looking ahead, we are also keep investing in AI and data-driven personalization. Our proprietary data enable us to drive innovation in areas like drug discovery, consumer engagement and targeted interventions. By integrating generative AI and micro services, we are creating a new revenue opportunity, further strengthening our ability to activate and engage members effectively and offering unparalleled value to our client.”
50. VCI Global Limited (NASDAQ:VCIG)
Market Capitalization: $34.244 Million
Number of Hedge Fund Holders: 1
VCI Global Limited (NASDAQ:VCIG) is a diversified holding company based in Kuala Lumpur, Malaysia, operating in five core sectors: Capital Market Consultancy, Fintech, Real Estate, AI & Robotics, and Cybersecurity. In AI, the company offers GPU servers, cloud computing services, and AI solutions, including LLMs.
On January 15, VCI Global (NASDAQ:VCIG) announced it has secured the exclusive distributorship of Secure Encryption Storage Limited (SES) for its AI-powered data security solutions in Malaysia. SES solutions offer advanced features such as real-time threat detection, virus protection, data encryption, and multi-channel backup, and are trusted by over 300 clients, including Fortune 500 companies and government agencies.
With the Malaysian cybersecurity market expected to grow from US$500 million in 2025 to US$800 million by 2029, VCI Global aims to capture 3% of the market and projects revenues of over 15 million in the first two years. The company also plans to expand into other Asian countries, Europe, and the US, providing cutting-edge cybersecurity solutions globally.
49. Lantern Pharma Inc. (NASDAQ:LTRN)
Market Capitalization: $39 Million
Number of Hedge Fund Holders: 3
Lantern Pharma Inc. (NASDAQ:LTRN) uses artificial intelligence, machine learning, and genomic data through its RADR platform to advance precision oncology. The company also offers an ADC therapeutic approach and collaborates with Oregon Therapeutics to optimize a cancer treatment candidate, XCE853, using AI.
In its third quarter 2024 earnings call, Lantern Pharma’s (NASDAQ:LTRN) CEO, Panna Sharma, highlighted the company’s progress in AI-guided drug development, powered by its RADR AI platform. The company is advancing multiple drug programs, including LP-184 and LP-284, with promising clinical data, such as the FDA Fast Track designation for LP-184 in glioblastoma.
AI is central to the success, especially in identifying biomarkers and guiding drug development, like with PTGR1 for LP-184. The company is also using AI to advance antibody-drug conjugates (ADC) and strengthen its position in the oncology field. The company’s AI-driven approach is helping to accelerate drug development and reduce costs.
48. Zepp Health Corporation (NYSE:ZEPP)
Market Capitalization: $42 Million
Number of Hedge Fund Holders: 2
Zepp Health Corporation (NYSE:ZEPP) specializes in smart wearables and health technology, offering products under the Amazfit, Zepp Clarity, and Zepp Aura brands. Its Zepp Digital Management Platform leverages AI chips, biometric sensors, and data algorithms to provide 24/7 health insights. The company offers a range of smart bands, watches, and accessories, using AI to analyze and display user data through its Zepp Life and Zepp mobile apps.
Amazfit, a consumer brand of Zepp Health (NYSE:ZEPP), unveiled its newest AI-powered lifestyle smartwatch, the Amazfit Active 2, at CES 2025. The wearable combines style and functionality as it features Zepp Coach Integration, which provides personalized training and running plans. It allows users of all fitness levels to reach goals ranging from 3K runs to marathons. The Zepp Coach is an AI-driven coaching algorithm that delivers customized guidance to support more effective training and recovery.
47. Duos Technologies Group, Inc. (NASDAQ:DUOT)
Market Capitalization: $43.5 Million
Number of Hedge Fund Holders: N/A
Duos Technologies Group, Inc. (NASDAQ:DUOT) is a Florida-based company that designs and deploys intelligent technology solutions across North America. The company offers platforms like Centraco for consolidating data and events, and truevue360 for developing AI algorithms for real-time applications. Main offerings include the Railcar Inspection Portal for automated railcar inspections and the Automated Logistics Information System for gatehouse operations. Duos also provides consulting, software licensing, training, and maintenance services.
On December 19, Duos Technologies (NASDAQ:DUOT) partnered with the Pampa Energy Center to develop high-density Data Center Development Parks in Pampa, Texas, through its subsidiaries Duos Edge AI and Duos Energy. The project will feature up to 500MW of natural gas self-generation and 200MW of wind turbine generation and support four 50MW high-density data centers, with the first expected to be operational by the end of 2025. Duos Energy, in collaboration with Fortress Investment Group, will provide energy through mobile gas turbines and transition to permanent facilities.
Duos Technologies also recently received a U.S. patent for its Oblique Vehicle Undercarriage Examiner, known as obliquevue. The patent, titled “Device to capture high-resolution images of the undercarriage of a freight car,” establishes Duos’ technology as a standard for wayside detection. This innovation furthers railcar inspection processes by improving safety through advanced engineering and AI.