In this article, we will look at the 7 Best Small Cap AI Stocks to Buy According to Wall Street Analysts.
On May 14, Ankur Crawford from Alger appeared on a CNBC Television interview to discuss her view of the Artificial Intelligence (AI) rally and the health of the market. She noted that some factions of the market are worried about a potential market bubble. However, Crawford believes that it’s still too early for a bubble scenario. She elaborates that while the capital expenditure for most of the AI companies is going up, it is still low considering the demand. Crawford highlighted that back in 2024, she had noted that the capital expenditure for AI companies will continue to go up till 2028, and we are still in 2026. This is mainly because the demand for AI compute is increasing, and the supply side is still short on providing the required computing power.
Crawford believes that the change that AI is bringing is more secular than cyclical. This is because the intelligence that is being derived from the computation is changing the US economy. She noted that the economy is changing from being consumer-driven to an industrial economy due to advancements in AI.
That said, Crawford is not at all worried about a market bubble and advised investors to look at valuation multiples of AI companies, considering their long-term potential. She believes that while the stock moves are sometimes drastic, they are usually driven by strong capital expenditure, which is expected to lead to productivity gains in the coming years.
Let’s take a look at the 7 Best Small Cap AI Stocks to Buy According to Wall Street Analysts.
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Our Methodology
To curate the list of 7 Best Small Cap AI Stocks to Buy According to Wall Street Analysts, we used the Finviz Stock Screener, WSJ, CNN, and Insider Monkey’s hedge fund database. Using the screener, we aggregated a list of small cap AI stocks (trading below the market cap of $5 billion) with analysts expecting more than 15% upside. Lastly, we ranked the stocks in ascending order of the upside potential. We have limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
7 Best Small Cap AI Stocks to Buy According to Wall Street Analysts
7. ACM Research, Inc. (NASDAQ:ACMR)
Market Capitalization: $4.25 billion
Analyst Upside: 16.96%
Number of Hedge Funds: 32
ACM Research, Inc. (NASDAQ:ACMR) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. Wall Street is bullish on ACM Research, Inc. (NASDAQ:ACMR) after the company posted Q1 2026 earnings on May 7.
Recently, on May 10, Jay Goldberg from Seaport Global reiterated a Buy rating on the stock with a price target of $75. Earlier on May 8, Christian Schwan from Craig-Hallum also reiterated a Buy rating on the stock and raised the price target from $67 to $81.
During the quarter, the company reported $231 million in revenue, up 34% year-over-year, and shipments of $241 million, up 54% year-over-year. Management attributed growth to be driven by strong performance in ECP and advanced packaging applications. Moreover, the gross margins came in at 46.5% above the midpoint of 42% to 48%, which is the company’s long-term range. The ECP segment revenue tripled year-over-year as the panel-level horizontal electroplating solutions gained traction in Asia and internationally.
Looking ahead, management has reaffirmed the full-year outlook at $1.08 billion to $1.175 billion. The company also noted a sharp increase in R&D and capital expenditure to enhance global expansion and expand products.
ACM Research Inc., together with its subsidiaries, develops, manufactures, and sells capital equipment in Mainland China and internationally. It also develops, manufactures, and sells a range of packaging tools to wafer assembly and packaging customers.
6. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Market Capitalization: $2.07 billion
Analyst Upside: 19.62%
Number of Hedge Funds: 27
BigBear.ai Holdings, Inc. (NYSE:BBAI) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. The stock has gained more than 4.35% since the release of its fiscal Q1 2026 earnings. Over the past month, the stock has gained more than 28%, driven by increased national security contracts.
The company reported its results on May 5. During the quarter, BigBear.ai Holdings, Inc. reported $34.4 million in revenue, steady year-over-year. However, the gross margins improved 1,278 basis points from 21.3% a year ago to 34% in Q1 2026. Management noted the quarterly performance was driven by growth in GenAI platforms.
Notably, the company improved its backlog by 14% from Q4 to $281.9 million in Q1 2026. This was driven by important contract wins, including a sole-source contract with an intelligence community customer with a $53 million ceiling and two trade and travel contracts worth $7 million. Moreover, the company has also secured contracts with NASA, US intelligence and security, and the Naval Research Labs for its generative AI solutions.
Bigbear.ai Holdings Inc. is a provider of AI solutions for defense, national security, and critical infrastructure, using machine learning at scale through its end-to-end data analytics platform.
5. SoundHound AI, Inc. (NASDAQ:SOUN)
Market Capitalization: $3.60 billion
Analyst Upside: 52.03%
Number of Hedge Funds: 22
SoundHound AI, Inc. (NASDAQ:SOUN) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. On May 8, DA Davidson lowered the firm’s price target on SoundHound AI, Inc. (NASDAQ:SOUN) from $14 to $12 and maintained a Buy rating on the shares.
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The rating comes after the company reported fiscal Q1 2026 earnings on May 7. The firm noted that although the company started fiscal 2026 by beating revenue expectations, this growth was driven by broad-based demand across the industry.
During the quarter, the company posted $44.2 million in revenue, reflecting 52% year-over-year increase, driven by growth in financial services and automotive segments. The automotive and IoT AI segment was up 88% year-over-year. Management highlighted that no single customer represented more than 10% of the total revenue, reflecting diversification. Looking ahead, management expects revenue in the range of $225 million to $260 million.
SoundHound AI Inc. is a voice intelligence company offering voice AI solutions to businesses.
4. Zeta Global Holdings Corp. (NYSE:ZETA)
Market Capitalization: $4.12 billion
Analyst Upside: 75.03%
Number of Hedge Funds: 47
Zeta Global Holdings Corp. (NYSE:ZETA) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. Wall Street is bullish on Zeta Global Holdings Corp. (NYSE:ZETA) since the company posted Q1 2026 earnings on April 30.
Recently, on May 1, Needham reiterated a Buy rating on the stock with a price target of $25. On the same day, RBC Capital raised the price target from $27 to $29, while keeping a Buy rating on the stock.
During the quarter, the company posted $396 million in revenue, up 50% year-over-year, marking the fourth consecutive quarter of growth. Moreover, the adjusted EBITDA came in at $66 million, reflecting 42% year-over-year growth. Notably, the Super-Scaled Customers reached 189, reflecting 19% year-over-year increase, and the customer ARPU came in at $1.7 million, up 21% during the same time.
Analysts at Needham noted that the company’s Marigold acquisition performed better than expected. Moreover, the company’s Athena AI solution led to its largest deal to date. Management has raised the full-year guidance by $30 million to $1.785 billion at the midpoint. RBC Capital finds this guidance to be conservative, considering early Athena traction.
Zeta Global Holdings Corp. is a New York-based operator of an omnichannel data-driven cloud platform. Founded in 2007, the company provides enterprises with consumer intelligence and marketing automation software.
3. Quantum Computing Inc. (NASDAQ:QUBT)
Market Capitalization: $2.30 billion
Analyst Upside: 87.50%
Number of Hedge Funds: 11
Quantum Computing Inc. (NASDAQ:QUBT) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. On May 11, Quantum Computing Inc. (NASDAQ:QUBT) released its fiscal Q1 2026 earnings. The share price has risen more than 14.4% since the release.
During the quarter, the company posted $3.7 million, reflecting a huge increase of 9,364.10% year-over-year and ahead of the estimates by 12.7%. The normalized EPS of -0.03 also exceeded the expectations of -0.05. The revenue was primarily driven by acquisitions, and ex-acquisition revenue was at $204 thousand, derived from foundry orders and an R&D subcontract with NASA.
Recent acquisitions made by the company include Lumina Semiconductor, Inc., and NuCrypt LLC. Management noted that these are now driving the bulk of revenue and broadening its portfolio in photonics and quantum communications. As a result, the order backlog at the end of the quarter stood at $16 million.
Following the release on May 12, Cantor Fitzgerald reiterated a Neutral rating on the shares with a price target of $10.
Quantum Computing Inc. is an innovative company that engages in quantum optics and integrated photonics technology.
2. WeRide Inc. (NASDAQ:WRD)
Market Capitalization: $2.62 billion
Analyst Upside: 88.61%
Number of Hedge Funds: 19
WeRide Inc. (NASDAQ:WRD) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. On May 13, WeRide Inc. (NASDAQ:WRD) announced fiscal Q1 2026 results. The company posted around $16.5 million in revenue, reflecting 57.6% year-over-year increase. The growth was driven by a 115.8% year-over-year increase in Product revenue, which reached $3 million. Management attributed product revenue performance to strong revenue from robotaxi and other L4 vehicle sales.
Notably, the gross profit came in at RMB 39.6 million ($5.7 million), a 55.9% increase year-over-year. Management noted the gross margin of 35% to be industry leading, driven by the company’s efficient playbook and focus on higher value markets. For instance, the fleet of robotaxis in China has grown to around 1,000 vehicles, and registered users have more than doubled year-over-year.
Management highlighted that they are focused on becoming the leading global autonomous platform driven by their strong AI infrastructure.
WeRide Inc. is a global leader in autonomous driving technology that develops and deploys L2-L4 self-driving solutions, focusing on robotaxis, intelligent driving, and smart mobility. It provides driverless services for mobility, logistics, and sanitation industries, including Robotaxis, Robobuses, Robovans, and Robosweepers.
1. Pony AI Inc. (NASDAQ:PONY)
Market Capitalization: $3.98 billion
Analyst Upside: 136.81%
Number of Hedge Funds: 31
Pony AI Inc. (NASDAQ:PONY) is one of the Best Small Cap AI Stocks to Buy According to Wall Street Analysts. On May 8, Pony AI Inc. (NASDAQ:PONY) announced that the company experienced a sharp increase in robotaxi demand during the China Labor Holiday from May 1 to May 5.
During this period, the robotaxi service’s average daily orders witnessed 544% year-over-year increase. Management attributed this growth to fleet expansion and growing customer adoption from the early stage to commercial use in China.
The average paid orders were also up around 155% from the recent New Year holidays, suggesting recent rapid growth and not merely year-over-year growth. The growth is also driven by the 7th-generation robotaxi launched last year. Moreover, management is targeting more than 3,000 vehicles on the road by the end of the year. The company has also been forming industry partnerships, which are helping it deploy vehicles at scale.
Pony AI Inc. is a global leader in autonomous driving technology that develops, tests, and operates self-driving systems for Robotaxis, Robotrucks, and passenger vehicles. It focuses on L4-level autonomous driving, with major commercial operations and international testing, including partnerships with Toyota Motor Corp.
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