We recently published a list of Complete List of All AI Companies Under $2 Billion Market Cap. In this article, we are going to take a look at where POET Technologies Inc. (NASDAQ:POET) stands against other AI companies under $2 billion market cap.
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.
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).
The silhouette of a data center facility in the sunset, illustrating the companies focus on data center solutions.
POET Technologies Inc. (NASDAQ:POET)
Market Capitalization: $381.4 Million
Number of Hedge Fund Holders: 5
POET Technologies Inc. (NASDAQ:POET) focuses on advanced chip-scale photonic solutions, particularly for AI networks and hyperscale data centers. Its key innovation is the POET Optical Interposer, a platform that integrates electronic and photonic devices at the wafer level, offering advantages such as lower costs, energy efficiency, and miniaturization. The technology is pivotal for optical engines used in AI clusters, enabling scalable, high-performance data communication. POET is developing optical engines that can scale from 400G to 3.2T, positioning itself as a leader in the future of AI and data center communications, with strong industry partnerships validating its approach.
In October 2024, POET Technologies (NASDAQ:POET) was awarded the “Best in Artificial Intelligence” title at the 2024 Global Tech Awards, held on October 14. This recognition was the third major accolade the company has received in 2024, following the AI Breakthrough Award for “Best Optical AI Solution” and the Gold Prize for “AI Innovator of the Year.” POET was chosen for its innovative approach to advancing AI networks and hyperscale data centers.
In December 2024, POET completed the acquisition of 100% control of Super Photonics Integrated Circuit Xiamen Co., Ltd. (SPX) by acquiring the remaining minority equity interests from Quanzhou San’an Optical Communication Technology Co., Ltd. The acquisition adds to POET’s production capacity for optical engines, which are vital for AI clusters, through agreements with Globetronics Manufacturing in Malaysia. The acquisition includes a $6.5 million purchase of Sanan’s equity, with payments over five years, and the acquisition of $3.8 million in production equipment. POET also plans to rename SPX to reflect its status as a subsidiary.
Overall, POET ranks 25th on our list of the 59 AI companies under $2 billion market cap. While we acknowledge the potential of POET 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 timeframe. If you are looking for an AI stock that is more promising than POET 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.
