In this article, we will discuss the best technology penny stocks to invest in according to hedge funds.
On April 10, Dan Ives, Senior Equity Research Analyst at Wedbush Securities, joined BNN Bloomberg to discuss that the recent sell-off in big tech and software stocks has gone too far. He noted that while the market has been volatile due to concerns regarding Iran, signs of a ceasefire suggest that this black swan situation is now contained, likely leading to a risk-on market in the coming weeks. Ives emphasized that the industry is only in the third year of an eight-to-ten-year AI revolution and predicts that tech stocks will reach new all-time highs by the summer.
Ives also explained that while the trade has broadened beyond the Mag 7 to include his Ives AI 30 derivatives (covering software, cybersecurity, and infrastructure), the Mag 7 itself is massively oversold. He predicts these core tech stocks could rise about 30% over the next year. Looking at the broader software sector, Ives highlighted 2026 as the year of use case monetization. He noted that while there has been frustration over heavy CapEx from companies like Meta, Microsoft, and Salesforce without immediate returns, this is starting to change. He expects to see evidence of this monetization in Q1 earnings. He argued that software remains the most oversold subsector because many dismiss these companies’ ability to integrate new tools. He contended that AI-native firms like Anthropic will still need partnerships with established software companies because the ultimate winners will be those with the data, the data stack, and the existing install base.
Our Methodology
We used screeners to identify tech stocks that are trading below $5 per share, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Note: All data was sourced on April 28.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10 Best Technology Penny Stocks to Invest In According to Hedge Funds
10. 8×8 Inc. (NASDAQ:EGHT)
Number of Hedge Fund Holders: 19
8×8 Inc. (NASDAQ:EGHT) is one of the best technology penny stocks to invest in according to hedge funds. On April 21, 8×8 and Synthflow AI announced a partnership to integrate advanced agentic AI into the 8×8 Contact Center platform. This collaboration aims to modernize enterprise customer service by automating self-service interactions across voice, chat, and digital channels. By using Synthflow’s infrastructure, which has already processed over 65 million voice interactions, 8×8 customers can now deploy human-like AI answering assistants that handle complex conversations without requiring developer support.
The partnership focuses on addressing the growing $54 billion voice AI market by replacing cumbersome legacy systems with agile, low-latency technology. Synthflow’s agents are designed with advanced interruption handling, memory capabilities, and support for more than 30 languages. These features are intended to help businesses increase their containment rates (the percentage of inquiries resolved without a human agent), reducing operational costs while improving customer satisfaction/CSAT scores.
Strategically, the agreement extends beyond technical integration to include commercial expansion. The long-term roadmap enables 8×8 Inc. (NASDAQ:EGHT) and its channel partners to resell Synthflow directly, and the platform will be made available to small and medium-sized businesses through the 8×8 App Store. This move positions both companies to offer a more scalable, no-code alternative to traditional contact center solutions.
8×8 Inc. (NASDAQ:EGHT) provides an integrated AI-driven platform combining contact center, unified communications, and CPaaS solutions. The company helps global organizations enhance customer experience and team collaboration through personalized journeys and operational insights.
9. Repay Holdings Corporation (NASDAQ:RPAY)
Number of Hedge Fund Holders: 20
Repay Holdings Corporation (NASDAQ:RPAY) is one of the best technology penny stocks to invest in according to hedge funds. On April 17, Repay Holdings confirmed receiving an unsolicited, non-binding proposal from Forager Capital Management LLC to acquire all outstanding shares of the company. The offer is priced at $4.80 per share in cash. Forager Capital is currently a stockholder in the Atlanta-based payment processing firm.
The Board of Directors at Repay Holdings has stated that it will review the proposal in consultation with its financial and legal advisors to determine the best course of action for the company and its stockholders. At this time, the company has advised that no action is required from stockholders as the evaluation process begins.
To assist in the review, Repay Holdings Corporation (NASDAQ:RPAY) has engaged JPMorgan Securities LLC as its financial advisor. Legal counsel is being provided by Troutman Pepper Locke LLP and Sullivan & Cromwell LLP. Repay Holdings is a major player in the integrated payment processing space, specializing in digital payment solutions across various software-vertical markets.
Repay Holdings Corporation (NASDAQ:RPAY) is a payment technology company offering integrated solutions that enable businesses to accept and send electronic payments, serving sectors such as personal loans, auto finance, and B2B through its Consumer and Business Payments segments.
8. Backblaze Inc. (NASDAQ:BLZE)
Number of Hedge Fund Holders: 21
Backblaze Inc. (NASDAQ:BLZE) is one of the best technology penny stocks to invest in according to hedge funds. On April 13, Backblaze appointed Anuj Kumar as Chief Revenue Officer to spearhead its global go-to-market strategy and revenue operations. Kumar brings over 20 years of experience in scaling enterprise infrastructure organizations, most notably leading NetApp’s worldwide cloud business through a period of substantial growth. His appointment comes as Backblaze enters a new phase of infrastructure demand driven by the rapid adoption of AI-native applications and neocloud services.
The transition follows a strong FY25 for Backblaze’s B2 Cloud Storage business, which recorded 26% year-over-year growth and secured its first eight-figure contract. Kumar will oversee two primary AI growth vectors: providing the storage backbone for GPU neocloud providers (a market projected to reach $14 billion by 2030) and supporting AI developers generating large-scale datasets. The company already services hundreds of AI firms involved in model training and media generation.
CEO Gleb Budman highlighted Kumar’s expertise in navigating the AI infrastructure ecosystem and his ability to drive execution rigor as the company moves upmarket. Kumar, who previously held senior leadership roles at SUSE, HUMAN Security, and VMware, aims to use Backblaze Inc.’s (NASDAQ:BLZE) S3-compatible, cost-efficient platform to capture durable, compounding revenue. He holds a degree in Electrical Engineering from BIT Mesra and has led sales organizations across three continents.
Backblaze Inc. (NASDAQ:BLZE) is a storage cloud platform that facilitates cloud storage and data backup for individuals and businesses. With an emphasis on high-performance, cost-effective storage, the company delivers its services through web-scale software infrastructure. It offers cloud storage services for public, hybrid, and multi-cloud data storage.
7. Clarivate (NYSE:CLVT)
Number of Hedge Fund Holders: 21
Clarivate (NYSE:CLVT) is one of the best technology penny stocks to invest in according to hedge funds. On April 28, Clarivate introduced Nexus Connect, a first-of-its-kind AI gateway designed to integrate university-licensed research and library services directly into general-purpose AI chat agents like ChatGPT and Claude. Using the Model Context Protocol/MCP, the platform allows students and researchers to access scholarly resources and manage library tasks, such as book renewals and discovery, without leaving their AI workspace.
The platform functions as a university-branded connector that grounds AI responses in trusted, institutional content. This addresses a gap for academic libraries by providing visibility and control over how licensed resources are surfaced within AI environments. By integrating with Clarivate’s Academic AI Platform and existing tools like Primo & Alma, Nexus Connect ensures that libraries remain central to the research process, offering features such as entitlement-based access, configurable search scopes, and enterprise-grade privacy protections.
Five universities across North America and the APAC region are slated to be the first to deploy the technology, with a broader early access program scheduled for July. Initial use cases allow users to search the Clarivate Central Discovery Index and retrieve full-text materials or manage physical library accounts directly through a chat conversation. Clarivate (NYSE:CLVT) plans to expand the gateway’s capabilities in subsequent releases to include research guides, teaching materials, and additional third-party academic vendor services.
Clarivate (NYSE:CLVT) is a technology company with services covering global information, analytics, and workflow solutions. The company has 3 segments: academia and government, oriented towards research & analytics, content aggregation, and AI-powered workflow software solutions; IP, which handles IP management software; and life sciences & healthcare, which focuses on R&D tools.
6. Cricut Inc. (NASDAQ:CRCT)
Number of Hedge Fund Holders: 21
Cricut Inc. (NASDAQ:CRCT) is one of the best technology penny stocks to invest in according to hedge funds. On April 14, Cricut launched AI Project Designer, a new conversational tool integrated into Cricut Design Space that enables users to generate personalized, ready-to-make designs through chat. Instead of manually navigating complex editing software, makers can describe their ideas in plain language to create, edit, and refine projects.
Once a design is generated, it can be further customized on the Design Space Canvas before being cut by a Cricut machine. The tool is optimized for single-operation, 2D projects, making it ideal for creating custom labels, birthday decor, apparel designs, and home decals. By using a conversational interface alongside Cricut Inc.’s (NASDAQ:CRCT) library of 1.7 million images, the AI aims to make hyper-personalization more accessible to users of all skill levels.
However, the current version does not support 3D paper projects, cards, or multi-operation tasks like scoring. AI Project Designer is now available to all Design Space users, utilizing a credit-based system. While free users receive a one-time deposit of AI Credits, Cricut Access subscribers will receive a monthly allotment of credits to use across the company’s suite of AI tools.
Cricut Inc. (NASDAQ:CRCT) designs, markets, and distributes a creativity platform that enables users to turn ideas into professional-looking handmade goods in the US, Canada, the UK, Ireland, Australia, New Zealand, Western Europe, the Middle East, Latin America, South Africa, and Asia.
While we acknowledge the potential of CRCT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRCT and that has 100x upside potential, check out our report about the cheapest AI stock.
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