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10 Best Small Cap AI Stocks to Buy According to Analysts

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On July 14, Wedbush’s Dan Ives appeared on CNBC to discuss the expected tech sector earnings and explained how he thinks AI will give a boost to more than just the hyperscalers. According to LSEG, technology and communication services sectors were responsible for almost all of the earnings growth this season, and without them, overall earnings growth would be negative. Ives emphasized that the most significant factor behind this pattern, in his opinion, was the AI revolution which was spreading across software, cybersecurity, and cloud computing.

Ives then stated that if there were to be a weakness, it would likely come from networking players. Conversely, he expressed strong confidence in software. He particularly highlighted cloud computing and cybersecurity as significant beneficiaries due to the second and third derivatives playing out. He reiterated his view of the current period as a golden age for tech and believed the current earnings season was just the beginning, projecting a 10% to 15% rise in tech stocks in H2 of the year. However, cybersecurity has been lagging since the start of the quarter, even showing negative performance. Ives attributed the performance to a rotation of funds, possibly into higher-growth software and other AI-related plays. He contended that the market had misjudged the situation, believing that cybersecurity could be the biggest subsector performer for tech this year. He explained that as more services move to the cloud, cybersecurity would become increasingly essential.

That being said, we’re here with a list of the 10 best small cap AI stocks to buy according to analysts.

A portfolio manager, confident in her analysis, inspecting several stocks on her laptop screen.

Methodology

We used the Finviz stock screener to compile a list of the top small cap stocks that were trading under $5 billion. We then selected 11 AI stocks that had a high average upside potential of over 25%. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock, which was sourced from Insider Monkey’s database, as of Q1 2025.

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).

10 Best Small Cap AI Stocks to Buy According to Analysts

10. Cerence Inc. (NASDAQ:CRNC)

Number of Hedge Fund Holders: 18

Market Capitalization as of July 16: $385.43 million

Average Upside Potential as of July 16: 12.23%

Cerence Inc. (NASDAQ:CRNC) is one of the best small cap AI stocks to buy according to analysts. On June 26, Cerence Inc. announced that its core technologies are powering the new agentic and GenAI capabilities within the 4th generation of Mercedes-Benz User Experience/MBUX.

The advanced system will debut in the all-new and all-electric Mercedes-Benz CLA, marking the first launch of Mercedes-Benz’s MB.OS operating system. Cerence AI’s solutions are fundamental to the MBUX Virtual Assistant and support conversational capabilities across 25 languages.

Cerence AI also allows MBUX to deliver more natural and empathetic interactions by analyzing a user’s voice and responding with varying emotional speaking styles through Cerence’s neural Text-to-Speec/TTS technology. The 2026 Mercedes-Benz CLA electric sedan, which will feature this new MBUX system, is expected to be released in the fall of 2025, with a hybrid version following early in 2026.

Cerence Inc. (NASDAQ:CRNC) provides AI-powered virtual assistants for the mobility/transportation market in the US, the rest of the Americas, Germany, the rest of Europe, the Middle East, Africa, Japan, and the rest of Asia-Pacific.

9. Ambarella Inc. (NASDAQ:AMBA)

Number of Hedge Fund Holders: 35

Market Capitalization as of July 16: $2.82 billion

Average Upside Potential as of July 16: 20.16%

Ambarella Inc. (NASDAQ:AMBA) is one of the best small cap AI stocks to buy according to analysts. On June 24, Bloomberg announced that Ambarella is reportedly exploring strategic options, including a potential sale. Bloomberg’s Ryan Gould and Dinesh Nair reported that the company is working with bankers and has reached out to potential buyers.

Ambarella designs chips primarily used in video recording, streaming, and ADAS for self-driving cars. Its technology focuses on edge AI processing and human vision applications, such as video security, electronic mirrors, drive recorders, driver/cabin monitoring, autonomous driving, and robotics.

Potential buyers could include rival chip companies that are seeking to enhance their automotive portfolios or private equity firms. Ambarella last posted an annual profit in 2017 but is forecasting a 28% revenue growth in FY2025, driven by increasing demand for its edge AI products, which now account for 75% of its sales.

Ambarella Inc. (NASDAQ:AMBA) develops semiconductor solutions that enable AI processing, advanced image signal processing, and high-definition/HD and ultra-HD compression.

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AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…