We recently compiled a list of the 15 Best Small Cap AI Stocks to Buy Right Now. In this article, we are going to take a look at where Asana, Inc. (NYSE:ASAN) stands against the other small cap AI stocks.
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.
A close-up of a computer monitor with an open work management platform software.
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).
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.
Overall ASAN ranks 6th on our list of the 15 best small cap AI stocks to buy right now. While we acknowledge the potential of ASAN 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 ASAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
