U.S. small-cap tech has had a decent three-year run, but it’s been totally overshadowed by mega-cap AI winners. A clean proxy, the Invesco S&P SmallCap Information Technology ETF (PSCT), has compounded about 14–15% annually over the past three years through early November 2025. Over the same span, the Nasdaq-100 delivered roughly a 130% cumulative gain, which works out to a bit above 30% a year, and the S&P 500 Information Technology sector is running near 39% annualized, both pulled up by NVIDIA/Microsoft/AI-infrastructure heavyweights that small-cap benchmarks simply don’t own. So the underperformance isn’t because “tech is weak”; it’s because the part of tech that exploded isn’t in small-cap indices.
Three things have been sitting on small-cap tech. First, rates: small caps are more levered to financing costs, and 2024–25 kept real rates high enough that the Russell complex even slipped into a bear patch in April 2025.
Second, index mix: S&P 600-style tech skews to comms gear, niche semis, metering/industrial IT and software with mid-teens growth, not to hyperscale AI platforms, so it didn’t get the multiple expansion the large caps got. Third, investors just preferred liquid, profitable AI names, which pulled flows away from the small stuff. The forward read is a bit better: Kiplinger and other small-cap commentators have already started flagging 2026-style rate-cut/re-acceleration setups and the possibility of policy that’s friendlier to domestics, which would help the rate-sensitive end of tech first. But even in that scenario, the most realistic path is “catch-up,” not “new leadership,” because the earnings power and AI optionality are still concentrated up the cap ladder.
Methodology
For our list, we used Stock Analysis’ screener to identify small-cap technology stocks that are popular among elite hedge funds and Wall Street analysts. We have sorted the list in ascending order of their hedge fund sentiment, as of Q2 2025. Data for the market cap is as of November 14.
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).
9. Allot Ltd. (NASDAQ:ALLT)
Number of Hedge Fund Holders: 10
Market Cap: $429 Million
Allot Ltd. (NASDAQ:ALLT) is one of the small-cap tech stocks on Wall Street’s radar.
On October 20, 2025, TD Cowen & Co. initiated coverage on Allot with a Buy rating and a price target of $13, citing the company’s positioning to sustain double-digit profitable growth in the years ahead, driven by tailwinds in the cybersecurity market and its focus on an “underserved” small-business segment, which TD Cowen estimates offers a ~$10 billion total addressable market.
In other news, on October 23, Needham initiated coverage at Buy with a $12.50 target, pointing to the company’s security-first direction and momentum in carrier cybersecurity-as-a-service (CCaaS), a model that layers recurring subscription revenue on top of telco distribution.
Allot Ltd. (NASDAQ: ALLT), based in Hod HaSharon, Israel, provides network intelligence and cybersecurity solutions for telecom service providers and enterprises worldwide. Its products enable traffic analytics, network-based security services and application control across mobile and fixed networks. The company’s portfolio, marketed as Allot Smart and Allot Secure, uses deep packet inspection to provide traffic management and quality-of-experience optimization, application visibility and control, and network-based security (anti-malware, anti-phishing, DDoS/botnet mitigation) that carriers bundle as value-added services for consumer, SMB, IoT and enterprise customers.
8. Rekor Systems, Inc. (NASDAQ:REKR)
Number of Hedge Fund Holders: 10
Market Cap: $270.35 Million
Rekor Systems, Inc. (NASDAQ:REKR) is one of the small-cap tech stocks on Wall Street’s radar.
On October 22, 2025, the company announced it will enter the global deep-fake detection market by launching a new subsidiary named Rekor Labs, separate from its core roadway-intelligence business.
The company estimates that the global deep-fake detection market could exceed $30 billion over the next decade. According to the release, product development began in 2023 after government customers requested verification of mandated traffic videos, marking the transition toward audio, image and video authenticity detection.
The full product launch is expected in the first half of 2026, with proof-of-concept and alpha milestones reportedly completed. The new business will target five key verticals: news media and journalism, social-media platforms, government/security agencies, enterprise safety, and entertainment/film markets.
Rekor Systems, Inc. (NASDAQ:REKR) is a Maryland-based company that develops AI-enabled computer-vision and machine-learning platforms for roadway intelligence. The firm’s flagship solutions, such as the Rekor Discover®, Rekor Command® and Rekor Scout® products, aggregate mobility data and provide analytics to governments and businesses.
7. i3 Verticals, Inc. (NASDAQ:IIIV)
Number of Hedge Fund Holders: 11
Market Cap: $931 Million
i3 Verticals, Inc. (NASDAQ:IIIV) is one of the small-cap tech stocks on Wall Street’s radar.
On October 20 2025 the company announced a significant expansion of their partnership with the Supreme Court of Appeals of West Virginia, under which i3 Verticals will roll out its i3 CourtOne™ case-management platform across the state’s Circuit, Family and Magistrate courts.
The deal aims to simplify court operations, increase transparency and consolidate previously disparate systems into one unified software backbone. In addition, the contract includes add-on services such as the WVPASS public-data portal and i3’s Resolv 360™ fund-recovery solution to streamline financial workflows. The court’s Chief Justice William R. “Bill” Wooton described the move as a “critical modernization” for the state’s judiciary.
i3 Verticals, Inc. (NASDAQ:IIIV) provides software and payment solutions to public and private sector clients across the United States. The company’s products include case management, licensing, billing, and payment systems used by state and local governments, schools, and businesses.
6. Aeva Technologies, Inc. (NASDAQ:AEVA)
Number of Hedge Fund Holders: 19
Market Cap: $600.2 Million
Aeva Technologies, Inc. (NASDAQ:AEVA) is one of the small-cap tech stocks on Wall Street’s radar.
On November 5, 2025, the company announced a $100 million investment from funds managed by Apollo Global Management, structured as 4.375 % convertible senior notes due 2032 with an initial conversion price of $15.8643, roughly a 15 % premium to AEVA’s closing price the day before the deal.
CEO Soroush Salehian said the financing reflects “strong confidence” in Aeva’s market position and will accelerate deployment of its FMCW 4D LiDAR technology across automotive, industrial, and robotics applications. The company noted the funding will help scale commercialization and manufacturing efforts for its perception platform.
A few days later, on November 7, 2025, Morgan Stanley’s Joseph Moore maintained an Equal Weight rating on AEVA and trimmed his price target to $18.55 from $19.
Aeva Technologies, Inc. (NASDAQ:AEVA), based in Mountain View, California, develops next-generation perception systems that combine lidar-on-chip and silicon photonics to measure both velocity and position. Its 4D LiDAR sensors target autonomous driving, manufacturing automation, and smart infrastructure markets.
5. Backblaze, Inc. (NASDAQ:BLZE)
Number of Hedge Fund Holders: 21
Market Cap: $284.46 Million
Backblaze, Inc. (NASDAQ:BLZE) is one of the small-cap tech stocks on Wall Street’s radar.
On November 6, 2025, Needham maintained its Buy rating on Backblaze and cut its 12-month price target to $8. However, we could not find any commentary accompnying the price-target update.
The same day, Backblaze reported Q3 2025 results. The company’s Q3 worked because mix and scale finally lined up. B2 Cloud Storage jumped 28% to $20.7M while Computer Backup stayed flat, so growth came from the higher-velocity product. That shift, plus pricing and utilization, lifted gross margin to 62% from 55% and pushed adjusted EBITDA margin near 23%, with the net loss shrinking sharply. ARR rose 13% to $147.2M, led by B2 at $81.8M. The one caution sign: expansion slowed, with NRR easing to 106% from 118%, so upsell is less forceful than last year. Guidance keeps the bet on B2 momentum into Q4.
Backblaze, Inc. (NASDAQ:BLZE) is an independent cloud storage platform best known for B2 object storage and Computer Backup. The company says it serves over 500,000 customers in 175 countries and emphasizes S3-compatible, price-predictable storage for AI and data-heavy workloads.
4. Penguin Solutions, Inc. (NASDAQ:PENG)
Number of Hedge Fund Holders: 25
Market Cap: $999 Million
Penguin Solutions, Inc. (NASDAQ:PENG) is one of the small-cap tech stocks on Wall Street’s radar.
On October 29, 2025, Penguin Solutions announced the general availability of Oracle Linux OS on its Stratus ztC Endurance fault-tolerant computing platforms, enabling customers to run Oracle Database applications, including Oracle E-Business Suite, with seven nines (99.99999%) system reliability. According to the company, that level of availability translates to 3.15 seconds or less of unplanned downtime or data loss per year on a single platform.
The Stratus ztC Endurance architecture allows enterprises to consolidate Oracle workloads without relying on complex clustered server setups that typically require additional networking, licenses, management tools, and scripting to achieve high availability, instead using built-in predictive fault tolerance to prevent outages and protect data. The solution is positioned for always-on environments in sectors such as energy, financial services, retail, telecommunications, and government, with support for Oracle Linux OS on Stratus ztC Endurance expected to be available in November 2025.
Penguin Solutions, Inc. (NASDAQ:PENG) is a provider of high-performance computing, AI infrastructure, fault-tolerant platforms, and advanced memory solutions helping customers address demanding edge, core, and cloud workloads.
3. Cognyte Software Ltd. (NASDAQ:CGNT)
Number of Hedge Fund Holders: 26
Market Cap: $618 Million
Cognyte Software Ltd. (NASDAQ:CGNT) is one of the small-cap tech stocks on Wall Street’s radar.
On October 22, 2025, the company announced that a long-standing military intelligence customer in the Asia-Pacific region has committed to a follow-on contract valued at over US$5 million. This customer has been with Cognyte for more than a decade, and the new deal expands their deployment into an additional frontline military unit tasked with border security and tactical SIGINT operations. According to the company, the expansion underscores the success of their “land-and-expand” strategy: win an initial deployment, prove value, then grow within the same customer.
The agreement enhances the customer’s mission-readiness, boosting operational efficiency, decision-making speed and intelligence capabilities across complex terrain. The deal also signals that Cognyte’s technology is resonating in high-stakes defence and intelligence markets and that repeat business is a core growth driver.
Cognyte Software Ltd. (NASDAQ:CGNT) is an Israel-based company that develops software-driven investigative analytics solutions tailored for national security, law enforcement and military customers. Its platforms leverage artificial intelligence, big-data analytics and machine learning to help agencies generate actionable intelligence, accelerate investigations and anticipate emerging threats.
2. LiveRamp Holdings, Inc. (NYSE:RAMP)
Number of Hedge Fund Holders: 31
Market Cap: $1.9 Billion
LiveRamp Holdings, Inc. (NYSE:RAMP) is one of the small-cap tech stocks on Wall Street’s radar.
Wells Fargo analyst Brian Fitzgerald upheld his Equal-Weight rating on LiveRamp Holdings, Inc. (NYSE: RAMP) on November 7, 2025, while raising the 12-month price target from $31 to $34, implying roughly a 9.7% upside at the time. The update came two days after the company released the Q2 results of their FY2026.
The results were solid because usage and ecosystem pull kicked in. Total revenue rose 8% to $200M as Marketplace & Other grew 18% to $50M while subscription rose 5% to $150M. That mix plus scale lifted operating leverage: GAAP operating income hit $21M and non-GAAP reached $45M. ARR climbed to $516M, the biggest sequential increase in seven quarters, signaling sturdier forward subscription growth.
Gross margin eased a couple points while the company leaned into data-collaboration demand and product launches, including AI agent orchestration, NL-driven segmentation, and search inside the marketplace. .
LiveRamp Holdings, Inc. (NYSE:RAMP), headquartered in San Francisco and trading under ticker RAMP, provides a data-collaboration platform aimed at enabling enterprises to unify and activate customer identity data in a privacy-safe manner. Its business model spans identity resolution, data connectivity and measurement solutions sold to brands, agencies and data-owners globally.
1. NextNav Inc. (NASDAQ:NN)
Number of Hedge Fund Holders: 33
Market Cap: $1.7 Billion
NextNav Inc. (NASDAQ:NN) is one of the small-cap tech stocks on Wall Street’s radar.
NextNav Inc. released their Q3 report on November 6, 2025. The distilled takeaway is progress toward commercialization, not headline revenue. They spent the quarter pushing the FCC process forward, amassing spectrum, and proving 5G-PRS tech in the wild: new lower-900 MHz licenses, a two-year AT&T network-ops extension, a 5G timing and positioning milestone on standard gear, and an Oscilloquartz integration for critical infrastructure.
Revenue was just $0.887M and operating loss widened, yet net income printed slightly positive, driven by non-operating items and fair-value swings. The cash and investments pile of $167.6M gives runway while long-term debt funds the build. The bet is clear: secure policy, lock assets, validate tech, then scale a terrestrial GPS complement.
Operationally, the quarter stacked tangible catalysts: closed a batch of Lower-900 MHz licenses on Sept 25 (additive spectrum), extended AT&T network-ops support for two years on Oct 9, hit a 5G PRS milestone on Oct 10 (timing + positioning while carrying uplink/downlink data on standard 5G gear), showcased at MWC Las Vegas (Oct 14–15), and unveiled an Oscilloquartz integration for critical-infrastructure timing on Oct 24. Management framed the agenda bluntly: keep pushing the FCC to take the next procedural step and be ready to commercialize when policy opens the gate.
NextNav Inc. (NASDAQ:NN) holds the largest licence portfolio in the United States for the spectrum band set aside for terrestrial positioning services. Leveraging low-band spectrum and the global 5G ecosystem, NextNav delivers 3D Positioning, Navigation and Timing (PNT) solutions designed to work indoors and underground as a resilient complement to GPS.
While we acknowledge the potential of NN 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 NN and that has 100x upside potential, check out our report about this cheapest AI stock.
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