10 Most Promising Small-Cap Stocks to Buy According to Hedge Funds

8. Palladyne AI Corp. (NASDAQ:PDYN)

Number of Hedge Fund Holders: 15

Market Cap: $330.71 million

Palladyne AI Corp. (NASDAQ:PDYN) is one of the most promising stocks on our list.

TheFly reported on June 8 that Northland analyst Michael Latimore raised the price target on PDYN to $15 from $10 while maintaining an Outperform rating on the shares. The update followed the company’s announcement of an exclusive U.S. manufacturing and distribution partnership for advanced loitering munitions produced by Israel Aerospace Industries. Northland viewed the agreement as a potential catalyst for future growth and noted the possibility of a significant Department of War contract opportunity.

Additionally, more recently, on June 17, Palladyne AI Corp. (NASDAQ:PDYN) announced that it received two contracts from the U.S. Army to advance the development and operational testing of its SwarmOS and Gremlin-X autonomous technologies. The projects will evaluate the company’s AI-driven systems in military exercises, including Northern Strike 26-2, a major Department of War joint exercise. SwarmOS is designed to enable coordinated control of multiple autonomous platforms, while Gremlin-X focuses on reusable strike drone capabilities for challenging operational environments.

The demonstrations will provide further validation of PDYN’s autonomy solutions and support the company’s efforts to expand its role as a provider of advanced defense technologies for military applications.

Palladyne AI Corp. (NASDAQ:PDYN) is a U.S.-based AI and robotics company developing embodied AI software that enables robots and autonomous systems to observe, learn, and operate in complex environments.