Red Cat Holdings Inc. (RCAT): This Small-Cap Stock Is Poised To Outperform in 2025

We recently compiled a list of the 15 Small-Cap Stocks Poised to Outperform in 2025. In this article, we are going to take a look at where Red Cat Holdings Inc. (NASDAQ:RCAT) stands against the other small-cap stocks.

Fifteen small-cap stocks—predominantly under the technology sector—are taking center stage this year, boasting triple- to quadruple-digit performance in their share prices, thanks to the booming Artificial Intelligence sector.

In this article, we will dive into their performance and evaluate whether these stocks are poised to become the next big winners for your portfolio.

To come up with the 15 hottest small-cap stocks, we only considered companies with more than $3 million in trading volume and less than $2 billion in market capitalization.

A drone taking off from a commercial warehouse, representing the company’s custom manufacturing capabilities.

Red Cat Holdings Inc. (NASDAQ:RCAT)

Red Cat Holdings, a drone technology company integrating robotic hardware and software for military, government, and commercial operations, saw its shares soar by more than 1,630.49 percent to finish at $14.19 apiece.

Analysts attributed the surge in investor confidence to a strategic partnership with Palantir, as well as a wave of mysterious drone sightings in New Jersey and other Northeastern states. Wall Street expected that these events could lead to increased funding for the industry.

The partnership announcement came amid growing interest in the sector, spurred by recent drone sightings across the Northeast that have also raised national security concerns.

However, FBI officials clarified on Thursday that there was no evidence to suggest the drones pose a threat to national security and public safety. They further stated on Saturday that many of the sightings were likely misidentifications of manned aircraft as drones.

Overall RCAT ranks 2nd on our list of the small-cap stocks poised to outperform in 2025. While we acknowledge the potential of RCAT 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 timeframe. If you are looking for an AI stock that is as promising as RCAT 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.