Billionaire David E. Shaw’s 10 Small-Cap Stock Picks with Huge Upside Potential

7. Freshworks Inc. (NASDAQ:FRSH)

D. E. Shaw’s Equity Stake: $26.39 Million

Market Capitalization as of May 9: $4.34 Billion

Stock Upside Potential as of May 9: 39.66%

Number of Hedge Fund Holders: 40

Freshworks Inc. (NASDAQ:FRSH) provides simple, powerful service software for customer and employee experiences. Its AI-driven approach enhances efficiency and productivity, earning the trust of 72,000+ companies, including Bridgestone, Sony Music, and S&P Global.

In April, Freshworks Inc. (NASDAQ:FRSH) reported Q1 2025 revenue of $196.3 million, a 19% year-over-year increase, surpassing estimates and reflecting strong AI-driven growth. Key metrics include a 30% operating cash flow margin, $46.4 million non-GAAP income, $1 billion in cash reserves, and a 13% increase in customers contributing over $5,000 ARR. The company projects Q2 revenue of $197.3 million–$200.3 million and full-year revenue of $815.3 million –$824.3 million, targeting 13–15% growth.

“Freshworks had another fantastic quarter, outperforming our previously provided financial estimates in Q1 with revenue growing 19% year-over-year to $196.3 million, operating cash flow margin of 30% and adjusted free cash flow margin of 28%,” stated Dennis Woodside, Chief Executive Officer & President of Freshworks. “We continue to outperform because businesses are choosing Freshworks for our uncomplicated customer and employee service solutions.”

On May 1, Scotiabank raised Freshworks Inc.’s (NASDAQ:FRSH) price target from $14 to $18, maintaining a Sector Perform rating, citing its strong return on investment and competitive pricing amid potential macro challenges.