In this article, we will list the 5 Best Small Cap Tech Stocks to Buy According to Hedge Funds. Please visit 12 Best Small Cap Tech Stocks to Buy According to Hedge Funds if you would like to see the extended list and the methodology behind it.
5. Shoals Technologies Group Inc. (NASDAQ:SHLS)
Number of Hedge Fund Holders: 36
Shoals Technologies Group Inc. (NASDAQ:SHLS) is one of the best small cap tech stocks to buy according to hedge funds. On May 22, Guggenheim lifted the price target on Shoals Technologies Group Inc. (NASDAQ:SHLS) to $12 from $11 while maintaining a Buy rating on the shares. The firm updated its model to take into account the company’s fiscal Q1 earnings.
Shoals Technologies Group Inc. (NASDAQ:SHLS) also received a rating update from Goldman Sachs on May 7, with the firm lifting the price target on the stock to $11 from $10 while maintaining a Buy rating on the shares. It told investors in a research note that Shoals Technologies Group Inc. (NASDAQ:SHLS) delivered solid fiscal Q1 results, with revenue surpassing expectations and EBITDA and EPS in line. These trends were supported by resilient utility-scale solar demand, as well as stronger-than-expected fiscal Q2 guidance and an improved FY26 revenue outlook. However, the firm also stated that margin recovery visibility remains a key focus given slightly softer gross margins in the quarter.
Shoals Technologies Group Inc. (NASDAQ:SHLS) provides electrical balance of system solutions for solar energy projects. Its EBOS components include cable assemblies, disconnects, inline fuses, combiners, recombiners, junction boxes, wireless monitoring systems, transition enclosures, and splice boxes.
4. BlackLine, Inc. (NASDAQ:BL)
Number of Hedge Fund Holders: 37
BlackLine, Inc. (NASDAQ:BL) is one of the best small cap tech stocks to buy according to hedge funds. BofA reinstated coverage of BlackLine, Inc. (NASDAQ:BL) with an Underperform rating on May 12, setting a price target of $26 and telling investors that while the company “remains a durable platform,” sales and marketing costs are one-third of revenue, the stock lacks a clear catalyst for multiple expansion, and billings growth prospects are limited.
In another development, Piper Sandler lifted the price target on BlackLine, Inc. (NASDAQ:BL) to $37 from $35 on May 7, maintaining a Neutral rating on the shares. The firm stated that steady progress on the transition story continued in fiscal Q1, with platform pricing attach continuing to progress well and expanding to 13% of total eligible ARR from just 4% two quarters ago. It was encouraged by management reasserting line of sight to exceeding 50% non-seat based pricing mix exiting 2026. However, Piper added that although it finds the progress and results encouraging, the firm is remaining on the sidelines given the ongoing transition and overall enterprise budget priority concerns in a backdrop where the significant AI investment cycle unfolds across the enterprise.
BlackLine, Inc. (NASDAQ:BL) provides a cloud-based software platform involved in controlling and automating financial close and accounting processes. The company’s operations are divided into the United States and International geographical segments.
3. Harmonic Inc. (NASDAQ:HLIT)
Number of Hedge Fund Holders: 38
Harmonic Inc. (NASDAQ:HLIT) is one of the best small cap tech stocks to buy according to hedge funds. Harmonic Inc. (NASDAQ:HLIT) received several rating updates following the release of its financial results for fiscal Q1. On May 12, Needham lifted the price target on the stock to $18 from $17, maintaining a Buy rating on the shares and telling investors in a research note that the company delivered very strong Q1 results. Its Broadband segment beat consensus revenue and EPS estimates by 20% and 5c, respectively, while also delivering a fourth consecutive quarter of sequential growth. The firm further stated that the Rest of Market – non-Comcast/Charter – was also a highlight, with 78% year-over-year growth, as it suggested the much-desired customer diversification.
Harmonic Inc. (NASDAQ:HLIT) also received a rating update from Northland the same day. The firm lifted the price target on the stock to $15 from $14 and maintained an Outperform rating on the shares after what it called “much better” than expected Q1 results.
Harmonic Inc. (NASDAQ:HLIT) is involved in the development and sale of video delivery software, system solutions, products, and services. Its operations are divided into the Video and Broadband segments.
2. Appian Corporation (NASDAQ:APPN)
Number of Hedge Fund Holders: 39
Appian Corporation (NASDAQ:APPN) is one of the best small cap tech stocks to buy according to hedge funds. TD Cowen cut the price target on Appian Corporation (NASDAQ:APPN) to $24 from $27 on May 15, reiterating a Hold rating on the shares. The firm updated its model on the company after its investor day, where management laid emphasis on its positioning as a mission- critical process automation platform, as well as a key enabler of enterprise AI, as it provides the deterministic workflow architecture that pairs with non-deterministic AI to provide powerful and reliable outcomes.
Appian Corporation (NASDAQ:APPN) also received a rating update from DA Davidson on May 15. The firm cut the price target on the stock to $22 from $25, maintaining a Neutral rating on the shares and telling investors in a research note that, after attending the company’s Investor Day, it is incrementally positive regarding Appian Corporation’s (NASDAQ:APPN) opportunity to generate more meaningful revenue from AI use cases.
Appian Corporation (NASDAQ:APPN) provides business process management (BPM) solutions, with its products including BPM software, mobile application development, case management, and platform-as-a-service.
1. nCino, Inc. (NASDAQ:NCNO)
Number of Hedge Fund Holders: 47
nCino, Inc. (NASDAQ:NCNO) is one of the best small cap tech stocks to buy according to hedge funds. Citizens cut the price target on nCino, Inc. (NASDAQ:NCNO) to $23 from $32 on May 18, maintaining an Outperform rating on the shares. It told investors in a research note that the company remains an attractive software name despite investor concerns that agentic AI could eventually automate some of the workflows its platform supports. It believes that AI adoption in financial services is still in the early stages with uncertain ROI, adding that the current valuation appears to already reflect much of the long-term disintermediation risk while also preserving upside if nCino successfully incorporates AI into its offering.
nCino, Inc. (NASDAQ:NCNO) also received a rating update from Goldman Sachs on May 14, with the firm lowering the price target on the stock down to $21 from $24 while maintaining a Neutral rating on the shares after attending the company’s nSight Conference that week.
nCino, Inc. (NASDAQ:NCNO) provides cloud-based software applications for financial institutions in the United States and internationally.
While we acknowledge the potential of NCNO 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 NCNO and that has 100x upside potential, check out our report about the cheapest AI stock.
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