On February 9, Jay Woods of Freedom Capital Markets, Douglas Boneparth of Bone Fide Wealth, and Alex Kantrowitz of Big Technology appeared on CNBC to discuss rotation and tech volatility. Boneparth expanded on the theme of diversification and noted that while large-cap US stocks are the primary focus for many, mid-caps, small-caps, developed international markets, and emerging markets are all showing a strong start to the year. He pointed out that international markets are coming off an exceptional 2025, rewarding those with diversified portfolios.
Kantrowitz addressed the current volatility in tech and explained that while there is a firm belief that AI will succeed, the market is currently guessing who the ultimate winners will be: whether it is chip manufacturers, foundational model companies, or consultants. He suggested the market is in a period where it takes wild swings based on earnings as it attempts to predict outcomes two to three years into the future.
The software sector, particularly referencing the IGV (Software ETF), has hit six-year lows relative to the S&P 500. Woods described this as software sludge but viewed it as a sassy trading opportunity. Boneparth added that while buying dips in the S&P 500 is difficult, the software space currently offers meaningful discounts for long-term holders. He notes that if major private players like Anthropic or OpenAI were already public, the software ETFs would likely look much healthier.
That being said, we’re here with a list of the 11 best small cap tech stocks with high upside potential.
Our Methodology
We used screeners to identify small-cap tech stocks that are trading between $300 million and $2 billion and have an average upside potential of at least 50%. We 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 February 25.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11 Best Small Cap Tech Stocks With High Upside Potential
11. CEVA Inc. (NASDAQ:CEVA)
CEVA Inc. (NASDAQ:CEVA) is one of the best small cap tech stocks with high upside potential. On February 17, CEVA concluded 2025 with a record-breaking Q4, generating $31.3 million in revenue, which was a 7% increase year-over-year. This was driven by an 11% rise in licensing revenue and strong demand for connectivity, particularly in Wi-Fi, where shipments grew 31% over the previous year.
The company maintained exceptional profitability with non-GAAP gross margins reaching 89% and non-GAAP net income surging 86% to $4.9 million. These results reflect a successful push into the AI sector, with the company signing 18 licensing agreements in the quarter, including significant deals for its Neural Processing Unit technology
For 2026, CEVA Inc. (NASDAQ:CEVA) expects revenue growth between 8% and 12%, with non-GAAP operating income projected to climb as much as 40%. The CEO highlighted the company’s expanding NPU pipeline and noted recent design wins with top PC OEMs for AI-integrated chips as a major growth catalyst.
CEVA Inc. (NASDAQ:CEVA) provides silicon and software IP solutions to semiconductor and original equipment manufacturer companies in the US, Europe, the Middle East, the Asia Pacific, and internationally.
10. Netgear Inc. (NASDAQ:NTGR)
Netgear Inc. (NASDAQ:NTGR) is one of the best small cap tech stocks with high upside potential. On February 4, Netgear achieved a turnaround in 2025, marking its first year of revenue growth since 2020 with a $25 million annual increase. Strategically, Netgear strengthened its enterprise division by acquiring two software teams and expanding its partner ecosystem to 524 members. These moves are part of a broader shift to increase the enterprise portion of the business to 65%, supported by the acquisition of a perpetual license for its Pro AV operating system to drive long-term margin expansion.
Despite these successes, the company faces external pressures, most notably a global memory shortage driven by AI data center demand. This shortage is expected to escalate costs and potentially squeeze gross margins in H2 2026. On the consumer side, revenue declined by 7.3%, hampered by a steep drop in sales to service providers and a post-holiday demand softening that was more severe than typical seasonal trends.
Netgear Inc. (NASDAQ:NTGR) is focusing on its high-growth Pro AV managed switches, expecting to reach a stable inventory position by the end of Q1 to better match market demand. To mitigate rising component costs, the company plans to implement price increases in the enterprise sector and reduce promotions for consumer products.
Netgear Inc. (NASDAQ:NTGR) provides networking technologies for businesses, homes, and service providers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments: Enterprise and Consumer.
9. MNTN Inc. (NYSE:MNTN)
MNTN Inc. (NYSE:MNTN) is one of the best small cap tech stocks with high upside potential. On February 10, MNTN reported earnings for Q4 2025, with revenue surging 36% year-over-year to $87.1 million. The company achieved record positive net income for the quarter and saw significant gross margin expansion, which climbed to 82%. This performance was fueled by a 63% increase in active Performance TV customers, totaling 3,632.
While the company posted a full-year net loss of $6.4 million due to one-time IPO-related charges, its adjusted EBITDA for the year grew to $68 million, reflecting high operational efficiency and a successful focus on the small and mid-sized business segment within the CTV market. Despite the upward trajectory, MNTN faces challenges from larger competitors in the CTV space and a heavy reliance on its engineering team for constant innovation.
Management noted that their primary focus on SMBs might limit their reach into the large enterprise market, potentially capping certain revenue streams. For 2026, MNTN Inc. (NYSE:MNTN) issued full-year revenue guidance of $345 to $355 million and expects adjusted EBITDA to reach nearly $100 million. The CEO highlighted the role of QuickFrame AI and new generative AI tools for video and audio in streamlining customer onboarding and improving campaign performance.
MNTN Inc. (NYSE:MNTN) operates a technology platform that brings performance marketing to Connected TV. Its self-serve technology makes running TV ads as easy as search and social and helps brands to drive measurable conversions, revenue, site visits, and more.
8. Porch Group Inc. (NASDAQ:PRCH)
Porch Group Inc. (NASDAQ:PRCH) is one of the best small cap tech stocks with high upside potential. On February 11, Porch Group reported earnings for 2025, highlighted by an 11-fold increase in adjusted EBITDA, which reached $77 million. The company’s Q4 featured $112 million in revenue and an impressive 81% gross margin, reflecting strong operational discipline. This growth was supported by the successful launch of Porch Insurance in Texas and a surge in active agencies and quote volumes.
Despite these records, the company faces headwinds from a sluggish housing market, which has weighed on transaction volumes within its software and data segments. Management noted that a decline in stock price during Q4 negatively impacted the statutory surplus, and they do not anticipate the double-digit price increases seen in previous years to continue into 2026.
Looking forward, Porch Group Inc. (NASDAQ:PRCH) has set ambitious 2026 targets, including a revenue range of $475 to $490 million and a reciprocal written premium/RWP goal of $600 million. The company expressed long-term confidence in scaling to $3 billion in RWP, planning to use its excess surplus for potential M&A opportunities, renewal rights deals, and expanded agent partnerships across the country.
Porch Group Inc. (NASDAQ:PRCH) develops and sells software and data solutions, manages insurance services, and provides consumer services related to homeownership in the US. It operates through four segments: Insurance Services, Software & Data, Consumer Services, and the Reciprocal Segment.
7. Amplitude Inc. (NASDAQ:AMPL)
Amplitude Inc. (NASDAQ:AMPL) is one of the best small cap tech stocks with high upside potential. On February 18, Amplitude delivered a strong conclusion to 2025, reporting Q4 revenue of $91.4 million, which was a 17% increase year-over-year. The company reached an ARR of $366 million, marking its most successful quarter for net new ARR since 2021. This growth was particularly robust in the enterprise segment, where ARR rose by 20%, supported by a gross margin of 77% and a quarterly free cash flow of $11.2 million.
The acquisition of InfiniGrow also played a strategic role, expanding the platform’s capabilities into AI-native marketing analytics. Despite these gains, the company’s non-GAAP operating income remained modest at $4.2 million, or 4.6% of revenue. Management issued a cautious outlook for Q1 2026, forecasting a potential non-GAAP operating loss between $2.5 million and $4.5 million.
Furthermore, while new pricing and packaging strategies are intended to encourage data ingestion, they may create initial uncertainty regarding cost predictability for customers. Looking forward, Amplitude Inc. (NASDAQ:AMPL) is betting on its AI agents and a new Model Context Protocol to differentiate its analytics accuracy from competitors. The CEO noted that the platform achieves a 76% accuracy rate on complex queries, significantly outperforming rival solutions.
Amplitude Inc. (NASDAQ:AMPL), together with its subsidiaries, provides an AI analytics platform that helps analyze customer behavior within digital products in the US and internationally.
6. Pagaya Technologies Ltd. (NASDAQ:PGY)
Pagaya Technologies Ltd. (NASDAQ:PGY) is one of the best small cap tech stocks with high upside potential. On February 9, Pagaya Technologies delivered a strong financial performance for the full year 2025, with revenue climbing 26% year-over-year to $1.3 billion. The company achieved a turnaround in profitability, reporting GAAP net income of $81 million, which was a $483 million improvement over 2024, and a 76% surge in adjusted EBITDA to $371 million.
This growth was supported by a 9% increase in network volume to $10.5 billion and the onboarding of major new partners, including GLS and a leading North American buy-now-pay-later provider. Despite these gains, Pagaya is adopting a more conservative stance for 2026, prioritizing risk management over aggressive market share expansion.
Management has proactively tightened production and reduced exposure to higher-risk credit tiers in response to persistent macroeconomic uncertainty and cautious behavior among lending partners. This pullback is expected to result in more measured volume growth in the coming year. Looking ahead, Pagaya Technologies Ltd. (NASDAQ:PGY) aims to maintain a fee-related-performance margin between 4% and 5% while continuing to diversify its funding and product offerings.
Pagaya Technologies Ltd. (NASDAQ:PGY) is a product-focused technology company that deploys data science and proprietary AI-powered technology for financial services and other service providers, their customers, and asset investors in the US, Israel, and the Cayman Islands.
5. Ouster Inc. (NASDAQ:OUST)
Ouster Inc. (NASDAQ:OUST) is one of the best small cap tech stocks with high upside potential. On February 9, Ouster officially closed the acquisition of StereoLabs SAS to establish a unified sensing and perception platform for Physical AI. By integrating StereoLabs’ AI vision and 3D camera technology with Ouster’s high-performance digital lidar, the company now offers an end-to-end solution including AI compute, sensor fusion, and perception software.
This combination is designed to meet the growing industrial demand for synchronized lidar and vision data, simplifying development for customers in the robotics, industrial automation, and smart infrastructure sectors. The acquisition brings significant market reach and technical expertise to Ouster, adding StereoLabs’ base of over 10,000 customers and a developer community that has utilized more than 90,000 ZED cameras.
This merger targets emerging high-growth use cases, such as humanoid robotics and visual inspection, by providing machines with the tools to better sense and navigate the physical world. The transaction was completed earlier on February 4, for a mix of ~$35 million in cash and 1.8 million shares. Ouster Inc. (NASDAQ:OUST) will begin consolidating StereoLabs’ financial results starting in Q1 2026.
Ouster Inc. (NASDAQ:OUST) provides lidar sensors for the automotive, industrial, robotics, and smart infrastructure industries in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa.
4. Five9 Inc. (NASDAQ:FIVN)
Five9 Inc. (NASDAQ:FIVN) is one of the best small cap tech stocks with high upside potential. On February 19, Five9 delivered a strong performance in Q4 2025, with total revenue reaching $300 million and 8% year-over-year growth. A primary driver was the company’s enterprise AI revenue, which accelerated by 50% to surpass a $100 million annual run rate. This was supported by a 12% increase in subscription revenue, which now accounts for the vast majority of the company’s total earnings.
Management acknowledged that while AI adoption is growing rapidly, it is still in the early stages across the broader enterprise base. The company also remains cautious regarding macroeconomic volatility, including inflation and fluctuating interest rates, which could impact future performance.
Looking toward 2026, Five9 Inc. (NASDAQ:FIVN) issued a revenue guidance midpoint of $1.254 billion and expects to maintain an adjusted EBITDA margin of at least 24%. Leadership emphasized the strength of their Google Cloud partnership and their ability to orchestrate complex interactions between AI and human agents, particularly in the healthcare and retail sectors.
Five9 Inc. (NASDAQ:FIVN), together with its subsidiaries, provides intelligent cloud software for contact centers in the US and internationally. It offers a CX platform that delivers a suite of applications, which enables the breadth of customer service, sales, and marketing functions.
3. Intapp Inc. (NASDAQ:INTA)
Intapp Inc. (NASDAQ:INTA) is one of the best small cap tech stocks with high upside potential. Intapp announced a collaboration with Anthropic to integrate the Claude family of AI models into its governed platform, specifically targeting highly regulated sectors such as legal, investment banking, and accounting. The partnership aims to develop industry-specific expert AI agents that combine Claude’s advanced reasoning capabilities with Intapp’s proprietary data and specialized workflows.
These agents are designed to function as digital colleagues, understanding the unique relationships and work patterns inherent to professional firms while maintaining strict adherence to industry-standard playbooks. This collaboration ensures that AI-driven insights meet rigorous regulatory and compliance requirements. By pairing Anthropic’s foundational models with Intapp Inc.’s (NASDAQ:INTA) deep industry intelligence, the specialized agents will manage complex tasks such as ethical walls, conflict clearance, independence checks, and the handling of material non-public information.
This approach ensures that the jump from general frontier AI to applied industry tools does not sacrifice the uncompromising security and governance standards demanded by regulators, investors, and clients in professional services. Together, the firms intend to accelerate the adoption of agentic AI by providing a system that is interoperable, context-aware, and ready for immediate deployment in the world’s most sensitive industries.
Intapp Inc. (NASDAQ:INTA), through its subsidiary, Integration Appliance Inc., provides AI-powered solutions in the US, the UK, and internationally.
2. ZoomInfo Technologies Inc. (NASDAQ:GTM)
ZoomInfo Technologies Inc. (NASDAQ:GTM) is one of the best small cap tech stocks with high upside potential. On February 9, ZoomInfo concluded 2025 with a quarterly revenue of $319 million and an annual total of $1.25 billion, representing a 3% year-over-year increase. The company maintained high profitability, reporting a 38% adjusted operating income margin for Q4. A key driver of this performance was the company’s upmarket strategy, which now accounts for 74% of the business and grew 6%.
The company faced some headwinds, including a net revenue retention rate of 90% and challenges in the downmarket segment. Guidance for 2026 suggests a potential deceleration with ~1% GAAP revenue growth, as management adopted a conservative outlook that excludes revenue contributions from new products while accounting for development costs. Additionally, the rollout of AI-integrated products put some pressure on gross margins.
ZoomInfo Technologies Inc. (NASDAQ:GTM) is betting heavily on AI innovation and its Copilot platform, which has already reached 20% penetration of total annual contract value. The company plans to use a consumption-based monetization model for its AI solutions and has authorized an additional $1 billion for share repurchases.
ZoomInfo Technologies Inc. (NASDAQ:GTM), together with its subsidiaries, provides a go-to-market intelligence and engagement platform for sales, marketing, operations, and recruiting professionals in the US and internationally.
1. BlackLine Inc. (NASDAQ:BL)
BlackLine Inc. (NASDAQ:BL) is one of the best small cap tech stocks with high upside potential. On February 10, BlackLine achieved record-breaking financial results in Q4 2025, which was marked by a 22% growth in full-year bookings and its strongest booking quarter to date. Strategic milestones, such as the completion of a Google Cloud migration and a 20% increase in customers with over $1 million in ARR, have positioned the firm for further margin potential and long-term growth.
Despite these successes, the company faced challenges, including a peak in churn during the fourth quarter, primarily driven by strategic decisions in the lower middle market and external M&A activity. These factors contributed to a 92% revenue renewal rate, while the transition to a new platform pricing model caused some customers to pause purchasing decisions for more strategic evaluations.
BlackLine Inc. (NASDAQ:BL) is now focusing on digital finance transformation through multi-year renewals and AI integration, with ~20% of customers already adopting AI-driven tools. Leadership expects 25% to 35% of the customer base to transition to platform pricing by the end of 2026, supported by the acquisition of Wiselayer and Verity Accruals. These advancements aim to automate mundane accounting tasks and expand the company’s reach into upstream use cases.
BlackLine Inc. (NASDAQ:BL) provides cloud-based solutions to automate and streamline accounting and finance operations in the US and internationally.
While we acknowledge the potential of BL 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 BL and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
