The mid‑cap AI sector, typically defined as companies with market cap between $2 billion and $10 billion, is increasingly viewed as the market’s innovation engine room. These firms occupy a critical middle ground: unlike early-stage startups, they have the operational maturity and funding to scale; unlike large-cap tech giants, they’re not weighed down by legacy systems and bureaucracy. That agility is proving to be a competitive edge as the demand for AI integration accelerates across key sectors.
According to Mezzi’s 2025 industry survey, AI adoption stands at approximately 38% in IT and telecom, while financial services and healthcare sectors are adopting at 24% and 22%, respectively. These figures highlight a clear trend: AI is moving beyond pilot programs and into real operations, especially in sectors where automation yields immediate returns. Mid-cap firms, often specializing in domain-specific AI, like workflow automation, cybersecurity, or predictive analytics, are in a strong position to capitalize.
Meanwhile, the total addressable market is growing at a blistering pace. Fortune Business Insights projects that the global AI market will expand from $233.46 billion in 2024 to approximately $1.77 trillion by 2032, representing a compound annual growth rate of 29.2%. While more aggressive forecasts exist, this baseline already reflects one of the fastest-growing sectors in global tech.
What makes the mid-cap layer compelling is not just its ability to innovate, but its strategic relevance. These companies are increasingly being tapped for partnerships, acquisitions, and solution deployments by enterprises seeking faster turnaround than the hyperscalers can offer. Investor sentiment, too, is shifting—there’s growing recognition that the next breakout AI leaders may not be the usual mega-cap suspects, but rather the specialized, adaptable firms currently flying under most institutional radars.
Let’s now move to our list of 11 best midcap AI stocks to buy right now.
Methodology
For our list, we narrowed down to AI stocks that had a market cap between $2 billion to $10 billion, as of August 2025, and then from among those, picked stocks that had the highest number of hedge funds holding stake in them as of Q1, 2025. We ranked them on the hedge fund sentiment as well.
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).
11. BigBear.ai Holdings Inc. (NYSE:BBAI)
Market Cap: $2.06 Billion
Number of Hedge Funds: 18
BigBear.ai (NYSE: BBAI) is one of the best midcap AI stocks to buy right now. On July 31, 2025, the company announced a new partnership with DEFCON AI to co-develop next-generation decision intelligence solutions for the U.S. military. The collaboration focuses on advancing logistics and operational readiness, particularly in contested or high-risk environments. Their work will center around AI-powered modeling and simulation platforms designed to help defense agencies assess readiness, plan joint operations, and make faster, more informed decisions across multiple domains.
Unlike more generic AI plays, this deal anchors BigBear.ai deeper into the U.S. defense ecosystem, targeting logistics networks that underpin everything from troop movements to supply chain resilience. DEFCON AI, already known for its work on modeling sustainment for global operations, brings complementary capabilities to BigBear’s decision support systems. Together, they aim to tackle readiness planning across land, air, sea, and cyber, improving how military forces prepare and respond under uncertainty.
BigBear.ai is a U.S.-based provider of AI-driven decision intelligence solutions for both government and commercial clients. Its platforms help users forecast, simulate, and optimize outcomes in real time, with core applications in logistics, autonomous systems, national security, and digital transformation.
10. SoundHound AI, Inc. (NASDAQ:SOUN)
Market Cap: $6 Billion
Number of Hedge Funds: 18
SoundHound AI (NASDAQ: SOUN) is one of the best midcap AI stocks to buy right now. On August 11, 2025, Ladenburg Thalmann upgraded SoundHound from Neutral to Buy and raised its price target from $9 to $16. The upgrade followed strong Q2 results and renewed confidence in the company’s long-term trajectory. The analyst cited momentum across multiple segments, including enterprise voice AI, automotive integrations, and restaurant partnerships. They also noted that the recent acquisition of Amelia has expanded SoundHound’s capabilities in conversational AI, while the launch of Vision AI adds another layer to its platform differentiation.
Ladenburg expects SoundHound to generate over $270 million in revenue by 2027 and achieve double-digit adjusted EBITDA margins. While they acknowledge the company’s 22x EV/revenue multiple as elevated, they believe the upside potential outweighs valuation concerns. The firm pointed to improving revenue visibility, expanding deal flow, and increased demand for AI-native solutions as strong tailwinds going forward.
SoundHound AI is a California-based voice AI company that builds natural language understanding and speech recognition platforms for businesses. Its technology is deployed across industries including automotive, restaurants, and customer service, enabling users to interact with systems through voice and vision interfaces.
