In this article, we cover the 10 Best Robinhood Penny Stocks to Invest in.
Sentiments in the equity markets are at an all-time high, with major indices, such as the S&P 500, at record highs. While the catalyst behind the rally has been gains in large-cap stocks, a wave of opportunity is slowly emerging in small-cap and penny stocks, which are trading at highly discounted valuations. According to BTIG chief market technician Jonathan Krinsky, it promises to be a “small-cap summer,” hinting at a possible rotation.
The rotation from large-cap stocks comes as small caps and penny stocks have ample room to catch up, while trading below their fair value. Bank of America notes that short interest is more pronounced in small companies compared to mega caps, signaling it could unwind, resulting in a significant spike in prices.
From a macroeconomic standpoint, Angelo Kourkafas, senior investment strategist at Edward Jones, believes the long-term outlook favors small companies. That’s because inflation metrics have shown little impact from tariffs, fuelling the prospects of the U.S. Federal Reserve cutting interest rates.
Small companies are the most sensitive to interest rate cuts, as lower interest rates make it easier to access capital at affordable rates, thereby accelerating business activities.
“This year’s [earnings] estimates have been revised down, both for small and large caps, small to a greater extent, but 2026 estimates are holding pretty steady. So as we look at that rolling forward 12-months, it still looks pretty positive, and assuming [a] stable macroeconomic backdrop, we would expect small cap earnings to outperform large-cap earnings,”
While penny stocks can be highly volatile and uncertain, ALPS’ Paul Baiocchi advises focusing on quality companies. With that in mind, let’s look at the best Robinhood penny stocks to invest in amid the rotation from large to quality small companies.
Our Methodology
For this article, we conducted an extensive analysis of leading financial websites to identify the Best Robinhood Penny Stocks to Invest In. Our selection process was based on a consensus approach, where we considered stocks with significant upside potential as of September 9. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q2 2025. Finally, we ranked the stocks in ascending order based on their upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is straightforward: our research has demonstrated that we can outperform the market by replicating 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).
Best Robinhood Penny Stocks to Invest In
10. Tuya Inc. (NYSE:TUYA)
Share Price: $2.58
Stock Upside Potential: 27.91%
Number of Hedge Fund Holders: 11
Tuya Inc. (NYSE:TUYA) is one of the best Robinhood penny stocks to invest in. On August 27, Jefferies reiterated a Buy rating and increased the stock’s price target to $3.60 from $3.49. The price target hike comes on the heels of the stock’s strong momentum, given its 48.76% year-to-date gain.
The impressive run also comes against the backdrop of solid financial results characterized by a 9% revenue growth in the second quarter. Net profit was also up by 302% attributed to stable gross margins and substantial operational leverage.
Jefferies expects the company to benefit from increasing Artificial Intelligence of Things (AIoT) adoption, given that 93% of its device categories incorporate AI functions. In addition, its SaaS business continues to grow at an impressive rate, helping to offset the slowdown at IoT PaaS and Smart Solutions.
Tuya Inc. (NYSE:TUYA) is a global AIoT (Artificial Intelligence of Things) platform provider that empowers brands, manufacturers, and developers to create and sell smart devices and solutions. It offers a cloud-based platform with SaaS (Software as a Service) and PaaS (Platform as a Service) offerings, providing access to hardware, cloud services, app development tools, and AI capabilities.
9. Richtech Robotics Inc. (NASDAQ:RR)
Share Price: $2.68
Stock Upside Potential: 28.46%
Number of Hedge Fund Holders: 5
Richtech Robotics Inc. (NASDAQ:RR) is one of the best Robinhood penny stocks to invest in. On August 29, the developer of artificial intelligence autonomous robots announced the completion of a pilot program with the top five automotive dealerships by revenue in the U.S.
The successful pilot program has already led to one client confirming their intention to proceed with additional statements of work for their dealership locations. Consequently, Richtech Robotics is to undertake projects for the client as part of a Master Service Agreement signed in April.
The MSA agreement remains active as long as at least one statement of work is in effect. It will also automatically renew for an additional 12-month period. Additionally, Richtech Robotics has secured a sales agreement valued at over $4 million with Beijing Tongchuang Technology Development Co., Ltd. The deal is for the purchase and provision of services related to the company’s three product lines and is expected to impact fourth-quarter revenues positively.
Richtech Robotics Inc. (NASDAQ:RR) develops and sells AI-powered autonomous service robots for the hospitality, healthcare, and commercial sectors. The company’s robots automate tasks such as indoor transport and delivery, sanitation, and food and beverage services. Richtech’s product portfolio includes delivery robots, such as Matradee and Titan, sanitation robots like DUST-E, and beverage automation robots.
