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.

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. (NASDAQ:ACMR), 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. (NYSE:BBAI) 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. (NYSE:BBAI) 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.

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