We recently compiled a list of the 10 Hottest Smid-Cap Stocks So Far In 2025. In this article, we are going to take a look at where Cerence Inc. (NASDAQ:CRNC) stands against the other smid-cap stocks.
As the name suggests, smid-cap stocks have a valuation between $200 million and $20 billion. The definition is pretty flexible, but I’ll be working with the broadest one. Most stocks on the market fall into this category, so I think it is a good way to check the general pulse of the broader economy and look into some up-and-coming companies that may one day be the large caps of tomorrow.
We will be taking a look at some of them in this article by looking through stocks within the aforementioned market cap, sorted by their year-to-date gains so far in 2025. Do note that OTC stocks will not be included in this list.
You should keep in mind that while some of these stocks could be good buys, there is also a significant downside risk to stocks that have gained a lot recently.
A man with an AI powered virtual assistant, demonstrating the coexistence of the two.
Cerence Inc. (NASDAQ:CRNC)
YTD Performance: 61.16%
Cerence (NASDAQ:CRNC) is a tech company that makes voice-based virtual assistants for cars and other forms of transportation. It designs its AI software to handle natural language interactions so that drivers can speak naturally instead of tapping at screens or scrolling through menus. Most of Cerence’s revenue comes from licensing its in-car voice recognition technology and cloud-connected services to automakers worldwide. It has also expanded into generative AI for next-generation in-vehicle experiences, and this shift has drawn plenty of attention.
Cerence expects total revenue in a range of $236 million to $247 million, which includes about $20 million from fixed contracts. The company hit a negative adjusted EBITDA figure of $1.9 million in the fourth quarter of fiscal 2024, yet it exceeded revenue expectations in that same quarter by posting $54.8 million. Its management team has stated that profitability in 2025 is a top priority, and it has outlined cost savings of $35 million to $40 million. Analysts covering Cerence are slightly more optimistic now than they were several months ago, and they see a revenue potential of roughly $242 million in 2025.
Cerence then announced a shift to generative AI in November. This is mainly what caused the spike that month last year. It then repurchased $27 million of its convertible senior notes due 2025 at a discount in December and expanded partnerships with Nvidia (NASDAQ:NVDA). These back-to-back events are why CRNC turned into a multibagger.
It is now well over $13.
Overall CRNC ranks 9th on our list of the hottest smid-cap stocks so far in 2025. While we acknowledge the potential of CRNC as an investment, our conviction lies in the belief that some 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 CRNC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 10 Hottest Mid-Cap Stocks So Far in 2025 and 10 Hottest Large-Cap Stocks So Far in 2025
Disclosure: None. This article was originally published at Insider Monkey.