On August 29, Drew Matus, MetLife Investment Management chief market strategist, joined ‘The Exchange’ on CNBC to discuss the impact of AI on the job market. He stated that the real impact of AI will take place over the next decade, not next year. Matus’s investment thesis focuses on the longer-term opportunities in both technology and financial sectors, arguing that investment, rather than consumption, is the more likely source of future growth. His investment thesis is rooted in the belief that we need to invest in the future of technology. However, he also introduced a cautionary note: if you look at the top companies in America 30 years ago versus today, there is almost no overlap. He stressed the importance of keeping an eye on “AI native” companies that may displace older, more established companies. He also suggested that it is crucial to observe how well existing companies adapt to AI as a potential threat to their structure.
Earlier on August 25 as well, Steve Levy, Wired editor-at-large, joined CNBC’s ‘Squawk Box’ to discuss the state of AI valuations, as they have been noted to be extremely high. Levy explained that this upward trend is hard to stop because operating these AI businesses requires vast amounts of capital for computation, data, and talent. He stated that the prevailing belief is that AI will drive the entire tech sector and the world to new heights, so no one is bailing on AI. He conceded that a reckoning is inevitable because not all companies will be able to generate the revenue to justify their valuations in the long term, but for now, the ride continues. Levy also mentioned that a potential AI bubble pop would affect private markets more because the larger, publicly listed tech companies, while investing heavily in AI, are still fully developed businesses. Whereas, the high valuations of private AI companies are driven purely by the desire of investors to get in on the trend.
That being said, we’re here with a list of the 7 best small cap AI stocks to invest in according to hedge funds.
Methodology
We used the Finviz stock screener to compile a list of the top small cap AI stocks that were trading between $300 million and $2 billion. We then selected the 7 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2025.
Note: All Data was Sourced on September 18.
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).
7 Best Small Cap AI Stocks to Invest in According to Hedge Funds
7. Richtech Robotics Inc. (NASDAQ:RR)
Market Capitalization as of September 18: $673.02 million
Number of Hedge Fund Holders: 5
Richtech Robotics Inc. (NASDAQ:RR) is one of the best small-cap AI stocks to invest in according to hedge funds. On September 16, H.C. Wainwright analyst Scott Buck reiterated a Buy rating on Richtech Robotics while setting a price target of $3.50. Earlier in August, the company reported a loss of $4.1 million, or $0.04 per share, for Q3 2025.
Over the four quarters leading up to this report, Richtech has not been able to surpass consensus EPS estimates. This quarterly loss of $0.04 per share compares to a loss of $0.02 per share announced a year ago. The company’s revenue for the period was $1.2 million, which was lower than estimates. However, the company secured several business deals in Q3. These deals are expected to increase the company’s Q4 revenue and drive future recurring revenue.
The most recent one is a sales agreement, valued at over $4 million, with Beijing Tongchuang Technology Development Co., Ltd., which was announced on September 11. This deal is for the purchase and provision of services related to the company’s three product lines and is also expected to positively impact Q4 revenues.
Richtech Robotics Inc. (NASDAQ:RR) develops, manufactures, deploys, and sells robotic solutions for automation in the service industry in the US. The company offers indoor transport & delivery, sanitation, and food & beverage automation solutions.
6. Rezolve AI (NASDAQ:RZLV)
Market Capitalization as of September 18: $1.68 billion
Number of Hedge Fund Holders: 8
Rezolve AI (NASDAQ:RZLV) is one of the best small cap AI stocks to invest in according to hedge funds. On September 11, Rezolve AI announced the launch of its Visual Search capability. The transformative feature replaces traditional keyword search with a system powered by Rezolve’s proprietary vision models and GenAI, which enables consumers to instantly search a retailer’s catalog by pointing their phone camera at any item, uploading a photo, or using a screenshot.
The new technology is designed to collapse the gap between inspiration and purchase, which Rezolve terms Conversational Commerce. Instead of guessing product names or model numbers, customers can show what they want and engage in a natural-language and dialogue-like shopping experience. The system uses multimodal AI for both image and text/semantic understanding to interpret complex attributes like material, pattern, color, and style.
The Visual Search functionality integrates with Rezolve’s existing Brain Commerce and Brain Checkout platforms. Results from the visual discovery are presented with contextual prompts and suggestions, which lead customers directly to personalized recommendations and the one-tap checkout process, thereby building a closed-loop Conversational Commerce ecosystem.
Rezolve AI (NASDAQ:RZLV) provides GenAI solutions for the retail and e-commerce sectors. Its platform empowers retailers, brands, and manufacturers to create dynamic connections with consumers across various locations and devices.
5. Serve Robotics Inc. (NASDAQ:SERV)
Market Capitalization as of September 18: $768.88 million
Number of Hedge Fund Holders: 10
Serve Robotics Inc. (NASDAQ:SERV) is one of the best small cap AI stocks to invest in according to hedge funds. On September 9, Serve Robotics announced the acquisition of the assets of Phantom Auto Inc. and its subsidiary, Voysys AB, for a cash consideration of ~$5.75 million. The acquisition was completed earlier in the year and enhances Serve’s technology stack for its quickly expanding fleet of autonomous delivery robots.
Voysys AB is headquartered in Norrköping, Sweden, and was founded in 2014. It’s a pioneer in ultra-low latency video streaming, connectivity, and teleoperation technology. Its industry-leading platform-agnostic video and data streaming solutions are designed to connect to autonomous vehicles, machinery, and robots over heterogeneous networks, including 4G/LTE and 5G.
Voysys’ proprietary technology, which includes bandwidth regulation, advanced video compression, and multi-link redundancy, achieves a glass-to-glass latency as low as 50 milliseconds. The technology also offers a visualization toolbox for customizing the user experience with 3D, VR, and bird’s eye views, and includes an SDK for customizable 3D features like AR rendering. Voysys will continue to operate as a standalone video streaming and teleoperation technology provider under Serve’s Software & Data Services platform.
Serve Robotics Inc. (NASDAQ:SERV) designs, develops, and operates low-emission robots that serve people in public spaces for food delivery activity in the US.
4. Stagwell Inc. (NASDAQ:STGW)
Market Capitalization as of September 18: $1.37 billion
Number of Hedge Fund Holders: 15
Stagwell Inc. (NASDAQ:STGW) is one of the best small cap AI stocks to invest in according to hedge funds. On September 9, Stagwell announced the appointment of Meredith Aronson as Vice President, Corporate Affairs. Aronson’s hiring is part of the firm’s efforts to expand its Corporate Affairs practice by enhancing capabilities in reputation, integrated marketing & communications, research, and stakeholder engagement.
In her new capacity at Stagwell, Aronson will be responsible for developing integrated communications and reputation strategies for clients across various industries. She will also contribute to shaping the network’s thought leadership concerning reputation management and the evolving media landscape.
Meredith Aronson brings over 14 years of professional experience across the corporate, nonprofit, and government sectors. Most recently, she held senior leadership roles at JPMorganChase, where she focused on brand, product, and purpose-driven marketing initiatives to enhance trust and reputation. Earlier in her career, she served in the Obama administration, contributing to public-private partnerships on behalf of the US Department of Health and Human Services, and supported Michelle Obama’s Let’s Move! campaign.
Stagwell Inc. (NASDAQ:STGW) provides digital transformation, performance media and data, consumer insights & strategy, and creativity & communications services in the US, the UK, and internationally.
3. Cerence Inc. (NASDAQ:CRNC)
Market Capitalization as of September 18: $505.11 million
Number of Hedge Fund Holders: 16
Cerence Inc. (NASDAQ:CRNC) is one of the best small cap AI stocks to invest in according to hedge funds. On September 17, Cerence announced the full integration of its industry-leading Audio AI suite into Audio Weaver, the powerful audio development platform created by DSP Concepts, which is a leader in embedded audio software. The collaboration is designed to revolutionize in-car audio by enabling customers, particularly automakers, to seamlessly deploy Cerence AI’s automotive audio solutions.
The integrated solutions are offered as ready-to-go modules within Audio Weaver, which is a platform already production-proven in millions of consumer and automotive products worldwide, supporting deployment across chipsets from major vendors like ARM, Cadence, Qualcomm, NXP, and STMicroelectronics.
The complete Cerence Audio AI suite is now available through Audio Weaver and includes three key technologies. The first is Speech Signal Enhancement/SSE, which consists of hands-free, advanced sound-processing technologies that remove background noise from microphone inputs. The second is Emergency Vehicle Detection/EVD, an in-car technology that alerts drivers about approaching emergency vehicles. The third component is In-Car Communication/ICC, which is a voice processing technology that enhances conversations between passengers by amplifying and clarifying speech.
Cerence Inc. (NASDAQ:CRNC) provides AI-powered virtual assistants for the mobility/transportation market in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.
2. SES AI Corporation (NYSE:SES)
Market Capitalization as of September 18: $577.84 million
Number of Hedge Fund Holders: 20
SES AI Corporation (NYSE:SES) is one of the best small cap AI stocks to invest in according to hedge funds. On September 3, SES AI Corporation announced the appointment of Andrew Boyd to its Board of Directors. Boyd is replacing Michael Noonen, who resigned to focus on his other professional endeavors, following his service and contributions to SES AI over the past 3.5 years.
Andrew Boyd is a veteran of the investment community and capital markets. He currently serves as a Partner at Bramalea Partners, which is a technology-focused fund manager that he founded in January 2020. Before founding Bramalea, Boyd had a 15-year career at Fidelity Management & Research Company, where his roles culminated in him serving as the Global Head of Equity Capital Markets.
SES AI is noted as the first battery company to accelerate innovation by utilizing superintelligent AI across its entire business spectrum, from research and development, materials sourcing, cell design, engineering, and manufacturing, to battery health and safety monitoring.
SES AI Corporation (NYSE:SES) develops and produces AI-enhanced lithium metal and lithium ion rechargeable battery technologies for EVs, urban air mobility, drones, robotics, battery energy storage systems, and other applications.
1. Evolv Technologies Holdings Inc. (NASDAQ:EVLV)
Market Capitalization as of September 18: $1.40 billion
Number of Hedge Fund Holders: 37
Evolv Technologies Holdings Inc. (NASDAQ:EVLV) is one of the best small cap AI stocks to invest in according to hedge funds. On September 16, Evolv Technologies announced that it has renewed and expanded its partnership with Gillette Stadium, home of the New England Patriots and New England Revolution. The renewal extends the original agreement that was initiated in 2021.
The expanded partnership includes an increase in the number of entry points at which the company’s AI-based Evolv Express security screening systems will be used. As a result, all members of the public entering Gillette Stadium for football games, soccer matches, concerts, and other events will pass through an Express system.
The Evolv Express system is designed to detect concealed weapons while distinguishing them from many common items, which allows visitors to move through checkpoints at their natural walking pace to minimize congestion.
Evolv Technologies Holdings Inc. (NASDAQ:EVLV) provides AI-based weapons detection for security screening in the US and internationally. Its flagship product is the Evolv Express, which is an AI-based concealed weapons detection system
While we acknowledge the potential of EVLV 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 EVLV and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.
Disclosure: None.
