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.
Our 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.
9. C3.ai, Inc. (NYSE:AI)
Market Cap: $2.23 Billion
Number of Hedge Fund Holders: 24
C3.ai (NYSE: AI) is one of the best midcap AI stocks to buy right now. On August 11, 2025, Needham & Company reaffirmed its Hold rating on C3.ai following the company’s preliminary Q1 results, which fell short of expectations. The midpoint of C3.ai’s revenue guidance reflected a year-over-year decline of roughly 33 percent, raising concerns about the company’s near-term trajectory. While many peers in the AI space posted strong growth, C3.ai’s weaker outlook prompted Needham to take a cautious stance and refrain from issuing a price target.
The analyst highlighted multiple headwinds, including a still-ongoing sales restructuring and CEO Tom Siebel’s recent health issues, which have introduced uncertainty around execution. The firm noted that while C3.ai maintains strong visibility in enterprise AI applications, particularly in defense, energy, and manufacturing, the internal disruptions have made the investment case less clear in the short term. Needham did not signal bearishness but emphasized the need to see more consistent growth and organizational stability before considering a more optimistic outlook.
C3.ai is a California-based enterprise AI software company that provides configurable AI solutions for large-scale industries. Its platforms are used by defense agencies, utilities, energy firms, and other complex organizations to implement predictive maintenance, fraud detection, and optimization tools using machine learning and big data integration.
8. Qualys (NASDAQ:QLYS)
Market Cap: $4.67 Billion
Number of Hedge Funds: 30
Qualys, Inc. (NASDAQ:QLYS) is one of the best midcap AI stocks to buy right now. On August 12, 2025, Qualys announced that its Threat Research Unit (TRU) received two Pwnie Awards at the DEF CON cybersecurity conference for its groundbreaking work uncovering critical OpenSSH vulnerabilities. The awards, “Epic Achievement” and “Best Remote Code Execution (RCE)”, recognized Qualys for identifying CVE-2024-6387, the first pre-authentication RCE in OpenSSH in nearly two decades, and CVE-2025-26465, a man-in-the-middle attack affecting FreeBSD clients. The wins cement Qualys’ status as a major player in vulnerability research.
Alongside its ongoing threat research, Qualys expanded coverage within its Enterprise TruRisk Platform on August 12, 2025, issuing new vulnerability checks tied to Microsoft’s latest Patch Tuesday update. While the company did not publish a formal press release, its research portal listed 98 vulnerabilities across 12 Microsoft security bulletins, with immediate support deployed for customer environments. The update underscores Qualys’ operational emphasis on rapid detection and remediation, reinforcing its reputation for delivering same-day protections aligned with major vendor disclosures.
Qualys is a U.S.-based provider of cloud-native IT, security, and compliance solutions. Its platform is used by global enterprises to manage vulnerabilities, ensure policy compliance, protect against threats, and inventory digital assets across hybrid environments.
7. Globant S.A. (NYSE:GLOB)
Market Cap: $3.34 Billion
Number of Hedge Funds: 31
Globant S.A. (NYSE: GLOB) is one of the best midcap AI stocks to buy right now. On July 31, 2025, Globant unveiled a major upgrade to its Globant Enterprise AI (GEAI) platform, now incorporating Model Context Protocol (MCP) and Agent2Agent (A2A) Protocol capabilities. This update allows seamless interoperability between GEAI and external AI frameworks — from Agentforce and Google Cloud to Azure AI Foundry and Amazon Bedrock — making GEAI a more flexible and integrative foundation for enterprise AI.
The enhancement boosts enterprises’ ability to collaborate across AI systems more fluidly and modernize legacy systems with greater efficiency. By enabling platform-agnostic communication, developers can mix and match models while reducing integration friction. This positions Globant not just as a service provider, but as a connective fabric across complex AI ecosystems.
Globant is a Luxembourg-based digital technology company with a core focus on reinvention through AI-powered software solutions. Its end-to-end platform supports everything from agile teams to enterprise-grade AI deployments, helping global clients in sectors like media, tech, and finance bring innovative products to life.
6. Varonis Systems, Inc. (NASDAQ:VRNS)
Market Cap: $6.37 Billion
Number of Hedge Funds: 32
Varonis Systems, Inc. (NASDAQ: VRNS) is one of the best midcap AI stocks to buy right now. On August 11, 2025, Wells Fargo upgraded Varonis from Equal Weight to Overweight and raised its price target from $51 to $70, citing accelerating demand for AI-native data protection solutions. The firm highlighted Varonis’ positioning within the Agentic AI trend, noting that the company is increasingly benefiting from enterprise adoption of automated data security tools, including its growing managed detection and response (MDR) offering.
Wells Fargo expects revenue to climb to $806 million in 2026 and reach $968 million by 2027, representing a 26 percent and 20 percent year-over-year increase, respectively. The firm also raised its operating margin forecast for fiscal 2027 to at least 10 percent, well above the previous consensus of around 7.4 percent. Analysts noted that new go-to-market initiatives and continued expansion of Varonis’ Microsoft partnership could serve as additional catalysts for annual recurring revenue growth over the next two years.
Varonis Systems is a cybersecurity software company headquartered in Miami, Florida. It specializes in protecting enterprise data through automated access controls, threat detection, and data classification tools.
5. Zeta Global Holdings Corp. (NYSE:ZETA)
Market Cap: $4.41 Billion
Number of Hedge Funds: 40
Zeta Global Holdings Corp. (NASDAQ: ZETA) is one of the best midcap AI stocks to buy right now. On August 6, 2025, Canaccord Genuity maintained its “Buy” rating on Zeta Global and raised the price target from $26 to $28 on the back of a strong second quarter. Analyst David Hynes emphasized confidence in Zeta’s OneZeta platform adoption and AI-aligned “Zeta Answers” product, citing these as key drivers for expanding engagement.
Despite competitive pressures, Canaccord highlighted Zeta’s growth momentum and execution, including revenue growth, EBITDA gains, and accelerating free cash flow. The firm’s message was clear: business strength and AI innovation justify an elevated outlook.
Zeta Global is a New York–based marketing technology company delivering an omnichannel, AI-enhanced customer acquisition and engagement suite. Its Zeta Marketing Platform (ZMP) uses vast identity and behavioral datasets to enable predictive, data-driven marketing, and it’s gaining traction across enterprise clients.
4. UiPath Inc. (NYSE:PATH)
Market Cap: $5.47 Billion
Number of Hedge Fund Holders: 41
UiPath Inc. (NYSE: PATH) is one of the best midcap AI stocks to buy right now. On August 1, 2025, UiPath announced the general availability of its new Generative Extractions capability for the Intelligent Document Processing (IXP) platform. The release enables users to automate the processing of unstructured and complex documents using generative AI. This includes parsing multi-table layouts, freeform text, embedded graphics, and other non-standard formats that traditional document automation tools often fail to handle effectively. The feature is now live in the U.S. and Europe, with public previews rolled out to customers in Canada, Australia, and Japan.
This expansion marks a major step forward in UiPath’s strategy to integrate large language model capabilities across its platform. By bringing generative document understanding to production environments, the company is positioning its platform not just for routine automation, but for high-complexity, high-volume enterprise workflows. With many global organizations still struggling to extract structured insights from PDFs, scans, and multi-modal documents, this feature directly addresses one of the most persistent gaps in automation.
UiPath is a New York-based enterprise automation software company known for its robotic process automation (RPA) platform. UiPath is actively transitioning toward agentic automation, mixing deterministic RPA workflows with generative AI and AI agents. They’ve introduced tools like Agent Builder and launched the UiPath Platform for Agentic Automation, which orchestrates AI agents, robots, and humans into a unified intelligent system.
3. SentinelOne, Inc. (NYSE:S)
Market Cap: $5.26 Billion
Number of Hedge Fund Holders: 44
SentinelOne, Inc. (NYSE: S) is one of the best midcap AI stocks to buy right now. On August 6, 2025, SentinelOne announced an expanded partnership with Mimecast to advance human-centric cybersecurity. The integration connects SentinelOne’s Singularity™ Platform with Mimecast’s Human Risk Management (HRM) solution, enabling enterprises to correlate endpoint telemetry with behavioral insights and email-based threat intelligence. The goal is to strengthen real-time detection, automate risk scoring, and deliver targeted awareness training based on individual user behavior.
This collaboration marks a shift toward more adaptive, user-aware security frameworks. By analyzing how people interact with their environments, through devices, apps, and communications, the combined solution helps identify at-risk users and prioritize them for intervention. SentinelOne’s AI-driven endpoint protection feeds into Mimecast’s analytics to uncover patterns of risky behavior, enhancing both detection and prevention efforts.
SentinelOne is a California-based cybersecurity company that provides autonomous endpoint protection, cloud security, and identity threat detection through its Singularity™ Platform. The company employs artificial intelligence and machine learning to deliver real-time threat prevention, detection, and response at machine speed.
2. Confluent, Inc. (NASDAQ:CFLT)
Market Cap: $5.48 Billion
Number of Hedge Funds: 49
Confluent, Inc. (NASDAQ: CFLT) is one of the best midcap AI stocks to buy right now. On August 4, 2025, Citigroup maintained its Neutral rating on Confluent but sharply lowered its price target from $30 to $20, signaling a more cautious stance on the company’s near-term growth trajectory. Analyst Tyler Radke cited ongoing cloud optimization trends among Confluent’s largest customers, which are expected to weigh on the company’s cloud revenue growth well into the first half of 2026.
Despite the downgrade, the report acknowledged Confluent’s position as a leader in real-time data streaming and event-driven architecture. However, with macro pressures prompting clients to rein in cloud spend and elongate deal cycles, Citigroup opted to stay on the sidelines until demand signals improve. The lowered price target reflects a tempered outlook on both consumption-based revenue and the pace of enterprise expansion over the next few quarters.
Confluent is a data infrastructure company based in California. It provides a cloud-native platform built around Apache Kafka, enabling organizations to stream, process, and react to data in real time.
1. GitLab Inc. (NASDAQ:GTLB)
Market Cap: $6.48 Billion
Number of Hedge Funds: 52
GitLab Inc. (NASDAQ: GTLB) is one of the best mid‑cap AI stocks to buy right now. On August 6, 2025, GitLab signed a three‑year strategic collaboration agreement with Amazon Web Services (AWS). This expands access to GitLab Dedicated — a single‑tenant DevSecOps platform hosted by GitLab within customers’ selected AWS regions. The solution meets strict compliance requirements like data residency, network isolation, and private networking for regulated industries and the public sector.
The agreement aims to simplify software delivery by consolidating multiple development and security tools into one integrated platform. It reduces operational complexity, speeds up delivery pipelines, cuts costs, and enhances governance. The collaboration builds on GitLab’s prior AWS integrations, reinforcing its position in delivering secure, enterprise-grade DevSecOps.
GitLab is a DevSecOps platform company with corporate headquarters in SF, California. The company is powering intelligent software workflows. Its unified platform spans source control, CI/CD, security, and compliance and is used by businesses across sectors to safely ship software at scale.
While we acknowledge the potential of GTLB 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 GTLB and that has 100x upside potential, check out our report about this cheapest AI stock.
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