In this article, we explore the Goldman Sachs Penny Stocks: Top 12 Stock Picks.
The rotation towards small and micro-cap stocks is gaining momentum. While large caps and growth stocks have dominated performance in recent years, concerns about a potential correction are prompting investors to take a closer look at much smaller plays.
The S&P SmallCap 600 index, which measures the performance of the small-cap segment of the US equity market, is already up by more than 6% for the year. The iShares Micro Cap ETF is also up by about 8% over the same period. In contrast, the broader S&P 500 is up by 0.35% over the same period. The underperformance comes as investors pay close attention to valuations, opting to settle on stocks trading below their historical norms and at discounted valuations.
According to Wealth Alliance managing director Eric Diton, small stocks have been crushed by large stocks in recent years. However, earnings growth momentum amid an accommodative monetary policy environment should trigger a rotation.
“We’re expecting some big small-cap earnings this year and next. We’re overdue for some big small-cap outperformance, Diton said in an interview with Reuters.
The expectation of additional interest rate cuts affirms the case for penny and small-cap stocks.
Morningstar Chief US Market Strategist Dave Sekera explained last week: “According to our valuations, we think they have further to run. Looking forward, our economics team forecasts at least two more cuts to the fed-funds rate this year and long-term interest rates to fall further. Plus, the AI build out boom has spurred faster-than-expected economic growth. Historically, small-cap stocks perform best when the Fed is easing monetary policy, long-term interest rates are declining, and the rate of economic growth is reaccelerating.”
Goldman Sachs is one investment bank that maintains significant exposure to penny stocks as part of its diversification strategy. According to the investment bank, the baseline macro outlook is supportive of small-cap upside in 2026.
“We do not believe markets are fully pricing the likely strength of the US economy next year, and small-caps typically outperform during cyclical rallies. Futures positions and short interest also suggest upside risk for small-cap stocks, according to the Goldman Sachs portfolio strategy research team in a research note.”
Our Methodology
To identify Goldman Sachs’ top 12 penny stock picks, we analyzed the investment bank’s equity holdings as of the third quarter of 2025. We focused on companies trading under $5 per share and examined their popularity among hedge funds. Finally, we ranked the list in ascending order based on Goldman Sachs stake in the companies.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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).
Grupo Televisa, S.A.B. (NYSE:TV) is one of Goldman Sachs’ top penny stock picks. On February 10, Benchmark reaffirmed its Buy rating and $10 price target for Grupo Televisa, S.A.B. (NYSE:TV) ahead of its earnings report. The company is set to release fourth-quarter 2025 results on February 19, with TelevisaUnivision’s joint venture results due a day earlier.
Benchmark expects results to be mostly in line with last year, possibly slightly down or flat, but remains optimistic about stronger performance in 2026. The firm pointed to Mexico’s stable exports, strong peso, and easing tariff concerns as supportive factors.
Looking ahead, the firm believes Mexico’s growing role in nearshoring, along with competitive manufacturing and transportation costs, could boost investor interest in Mexican equities next year.
The research firm maintains a positive outlook on the stock, impressed by operational progress around the company and its TelevisaUnivision joint venture. It also expects the company to benefit from and capitalize on Mexico’s favorable economic fundamentals, especially in export growth and peso stability. Mexican exports to the US have been rising as the country benefits from lower tariff rates than those on Chinese exports.
The company is already closing in on a deal to acquire AT&T’s Mexican unit through its telecoms arms. Media reports indicate negotiations are in the final stages. A deal will allow Grupo Televisa SA to merge AT&T Mexico’s 24 million mobile customers with its 20 million fixed customers served by Izzi.
“Grupo Televisa and the Cerberus fund are indeed participating in a purchase agreement with AT&T,” said a source close to the government. “They have spoken with several companies, and talks with AT&T are ongoing; it may or may not go through, anything is possible these days,” said another source closely following the case.
Grupo Televisa, S.A.B. (NYSE:TV) is the largest telecommunications and media corporation operating mainly in Mexico. It provides cable and broadband (Izzi), satellite TV (Sky), and owns a large stake in TelevisaUnivision, which distributes content globally.
AtaiBeckley Inc. (NASDAQ:ATAI) is one of Goldman Sachs’ top penny stock picks. On January 16 at the 64th Annual Meeting of the American College of Neuropsychopharmacology (ACNP), AtaiBeckley Inc. (NASDAQ:ATAI) delivered promising clinical data on BPL-003 for treatment-resistant depression.
The results affirmed the development of transformative mental health therapies. The Phase 2b study for BPL-003 affirmed significant and sustained antidepressant effects in the treatment of resistant depression. The results assert potential commercial viability. AtaiBeckley has already secured Breakthrough Therapy designation for BPL-003 from the Food and Drug Administration.
Dr Kevin Craig, Chief Medical Officer at AtaiBeckley, said, “We are delighted that our Phase 2b BPL-003 results were not only selected for poster presentation but also recognized as a Hot Topic, one of the most competitive and prestigious categories at ACNP. This distinction underscores the strength and impact of our clinical findings in treatment-resistant depression.
On January 20, Guggenheim initiated coverage of AtaiBeckley with a Buy rating and an $11 price target, calling it a standout in next-generation psychiatry. The firm said the merger with Beckley Psytech secures full ownership of its lead drug, BPL-003, which has delivered strong and lasting results in Phase IIb trials for treatment-resistant depression, positioning it well for broad clinical use and commercial growth.
Earlier, on January 13, analysts at Cantor Fitzgerald reiterated an Overweight rating on AtaiBeckley. The research firm remains optimistic that the candidate drug BPL-003 will become one of the key players in the psychedelic treatment landscape.
AtaiBeckley Inc. (NASDAQ:ATAI) is a clinical-stage biopharmaceutical company focused on developing innovative psychedelic-based and neuroplasticity-promoting treatments for mental health disorders, such as treatment-resistant depression and social anxiety.
Precigen Inc. (NASDAQ:PGEN) is one of Goldman Sachs’ top penny stock picks. On January 20, Precigen Inc. (NASDAQ:PGEN) received a significant boost after a consensus paper authored by 16 physicians recommended its flagship drug, PAPZIMEOS, as the standard of care for adults with recurrent respiratory papillomatosis.
The recommendation is a significant boost as it asserts a potential shift from surgical intervention to treating underlying HPV infection that causes recurrent respiratory papillomatosis. The medical condition affects the respiratory tract and is caused by a chronic HPV-6 or HPV-11 infection.
“The speed and agility with which the authors evaluated the evidence and aligned on a recommended first-line treatment and new standard of care for adults with RRP underscores both the unmet need in this disease,” said Helen Sabzevari, President and CEO of Precigen.
Precigen has already transitioned into a commercial-stage company with the US approval of PAPZIMEOS in August 2025. It has become the first and only FDA treatment for adults with RRP. The company has also received a significant boost from the European Medicines Agency, which has validated the Marketing Authorization Application for PAPZIMEOS for the treatment of adults with RRP.
Precigen, Inc. (NASDAQ:PGEN) is a clinical-stage biopharmaceutical company focused on developing gene and cellular therapies to treat complex, high-need diseases in immuno-oncology, autoimmune disorders, and infectious diseases.
Clover Health Investments, Corp. (NASDAQ:CLOV) is one of Goldman Sachs’ top penny stock picks. On January 29, 2026, Clover Health Investments, Corp. (NASDAQ:CLOV) announced it will release fourth‑quarter financial results after market close on Thursday, February 26, 2026.
The stock has been edging higher after the company disclosed on January 14 that enrollees in its Medicare Advantage Plans are already up by 53% for the 2026 plan year.
The company entered 2026 with about 153k members as of January 1, with more than 97% of its MA membership enrolled on the flagship app PPO plan. The growth remains concentrated in core markets, where the company maintains strong coverage through its Clover Assistant platform and home care offerings.
Amid the significant increase, the company is on course to achieve its first-ever GAAP net income. Cost optimization and positive industry-specific factors are poised to accelerate the path to profitability.
“Together, we believe these dynamics will create compounding earnings and margin expansion over time, which we expect to position Clover to deliver its first year of GAAP net income profitability in 2026,” CEO Andrew Toy remarked.
Clover Health Investments, Corp. (NASDAQ:CLOV) is a healthcare technology company focused on improving medical outcomes for seniors through Medicare Advantage plans and its proprietary software platform, Clover Assistant. It operates as a next-generation insurer providing PPO and HMO plans to Medicare beneficiaries.
Coty Inc. (NYSE:COTY) is one of Goldman Sachs’ top penny stock picks. On February 9, Canaccord Genuity lowered its price target for Coty Inc. (NYSE:COTY) to $2.50 from $3.50, while maintaining a Hold rating.
The price target cut came on the heels of Coty Inc. delivering a 1% year-over-year increase in second-quarter fiscal 2026 sales to $1.67 billion, which topped analyst estimates. The company plunged to a net loss of $126.9 million, compared with net income of $20.4 million in the same quarter last year. On the other hand, adjusted EPS came in at $0.14, an improvement from $0.11 a year ago.
Meanwhile, Coty issued disappointing guidance, signaling a potential sequential decline despite year-over-year comparisons. The company expects like-for-like sales to decline by mid-single digits due to weakening Consumer Beauty sales trends, and has also withdrawn fiscal year 2026 adjusted EBITDA and free cash flow guidance.
“Our financial performance over the past year and a half has been disappointing, and our current share price reflects that reality. […].In parallel, we are continuing our portfolio review to identify opportunities to unlock shareholder value in both the near and long term, complemented by other value-driving initiatives, such as the recent divestiture of our remaining stake in Wella at the end of CY25, which delivers on our commitment.
Coty Inc. (NYSE:COTY) is one of the world’s largest beauty companies, specializing in the development, manufacturing, marketing, and distribution of fragrances, color cosmetics, and skin and body care products. Founded in 1904 in Paris, the company has evolved into a global industry leader with a portfolio of over 40 brands sold in more than 130 countries and territories.
FuboTV Inc. (NYSE:FUBO) is one of Goldman Sachs’ top penny stock picks. On February 2, FuboTV Inc. (NYSE:FUBO) delivered strong first fiscal 2026 results following a transformative business combination with Hulu + Live TV.
The company’s revenue was up 40% year over year to $1.55 billion, as net loss shrank to $19.1 million, compared to $38.6 million in the same quarter last year. The better-than-expected results came as the company enhanced consumer choice and expanded programming flexibility by tapping into its collective strength.
“2025 marked a year of transformation for Fubo as we completed a monumental business combination with Hulu + Live TV,” said David Gandler, co-founder and CEO of Fubo. “[…]. We remain focused on our consumer promise to deliver value and choice across our flagship Fubo and Hulu + Live TV Pay TV brands.”
Meanwhile, the company plans to conduct a reverse stock split of its Class A and Class B common stock. The board has already approved the split intended to make the stock more accessible to a broader base of investors.
fuboTV Inc. (NYSE:FUBO) is a sports-first live TV streaming company that operates as a “virtual multichannel video programming distributor” (vMVPD), essentially serving as an internet-based alternative to traditional cable TV.
Ambev S.A. (NYSE:ABEV) is one of Goldman Sachs’ top penny stock picks. On February 12, Ambev S.A. (NYSE:ABEV) delivered mixed fourth-quarter and full-year results, with revenue surpassing consensus estimates by R$210 million, coming in at R$24.81 billion.
However, it was an 8.2% year-over-year decline, attributed to a 3.6% decline in consolidated volumes due to cyclical factors affecting consumption occasions. On the other hand, fourth-quarter profit dropped 9.9% year over year to R$4.53 billion, translating into earnings per share of R$0.28, down from R$0.31 in the same period last year.
Meanwhile, cash flow from operating activities declined 4.8% to R$13.91 billion, while full-year cash flow dropped 6.3% to R$24.45 billion. Amid the decline, Ambev affirmed its commitment to shareholder value by asserting a R$20 billion return through share buybacks and dividends.
Looking ahead, management commented, “We continue to be positive about the beer category. The continued strength of our portfolio and the success of our innovations reinforce our confidence that there are meaningful opportunities to grow the category, both by expanding our consumers’ base and the number of occasions where beer is present.”
Ambev S.A. (NYSE:ABEV) is a major Brazilian-based brewery and beverage company that produces, distributes, and sells a diverse portfolio of beer, carbonated soft drinks (CSDs), and other non-alcoholic beverages across the Americas. As a subsidiary of Anheuser-Busch InBev, it operates in 18 countries, with strong market leadership in Brazil.
Baytex Energy Corp. (NYSE:BTE) is one of Goldman Sachs’ top penny stock picks. On February 2, in a regulatory filing, Baytex Energy Corp. (NYSE:BTE) confirmed the divestment of its US assets and also significantly strengthened its financial position. The company also sharpened its focus on high-return Canadian energy platforms as it entered 2026 in a net-positive cash position.
It also repaid its credit facilities and redeemed $1.264 billion of senior notes, finishing 2025 with about $857 million in net cash. The settlements significantly deleveraged the company’s balance sheet while allowing it to focus on its Canadian assets.
The company is projecting 67,000 to 69,000 barrels of oil per day in 2026, after averaging 67,295 barrels per day in 2025. In addition, it plans to spend between $550 and $625 million in exploration and development expenditure to enable modest production growth.
Baytex expects its heavy oil portfolio to deliver stable production and reliable returns in 2026. The growth would be supported by five drilling rigs across the heavy oil fairway.
Baytex Energy Corp. (NYSE:BTE) is a Calgary-based, upstream oil and gas company focused on the acquisition, development, and production of crude oil and natural gas, primarily operating in the Western Canadian Sedimentary Basin.
Wipro Ltd (NYSE:WIT) is one of Goldman Sachs’ top penny stock picks. On January 28, Wipro Ltd (NYSE:WIT) entered into a strategic collaboration with Factory.ai, an agent-native software development platform. The two are joining forces to help enterprises operationalize agent-native development across engineering organizations.
Factory.ai has carved a niche by enabling engineering teams to delegate a meaningful portion of software development to AI agents. Consequently, Wipro is to integrate its WEGA agent-native delivery platform to enhance its unified suite of AI-powered platforms, solutions, and offerings under Wipro Intelligence.
“Our partnership with Factory.ai reflects a broader shift among global enterprises, from Al experimentation towards production-scale adoption. Together we will help clients modernize faster and accelerate development using safe, production-grade autonomous agents,” said Sandhya Arun, Chief Technology Officer, Wipro Limited.
Earlier, on January 16, Wipro delivered mixed financial results for the quarter ended December 2025. Gross revenue in the quarter was up 5.5% year-over-year to $2.62 billion. Earnings per share for the quarter fell 7.2% year over year to $0.031. Consequently, Morgan Stanley downgraded the stock to an Underweight from Equalweight.
Wipro Limited (NYSE:WIT) is a leading global information technology (IT), consulting, and business process services (BPS) company. It provides services such as cloud computing, artificial intelligence (AI), cybersecurity, data analytics, and digital transformation to clients across 65 countries.
Plug Power Inc. (NASDAQ:PLUG) is one of Goldman Sachs’ top penny stock picks. On February 11, 2026, Plug Power Inc. (NASDAQ:PLUG) announced it has moved its reconvened Special Meeting of Stockholders to February 12 at 4:00 p.m. ET. The meeting will be held virtually, with stockholders of record as of December 12, 2025, eligible to participate.
Earlier on February 4, Plug Power Inc. announced the completion of the first hydrogen fill of a 32-kilometer pipeline in the Netherlands. The pipeline is to supply 32 tons of RFNBO-certified renewable green hydrogen while connecting the port and industrial demand centers in Rotterdam.
The completion follows the company’s award of a public tender for the project and the delivery of custom unloading infrastructure. The infrastructure is specifically designed for pipeline-purging and filling operations. The Netherlands pipeline builds on the H2CAST project in Germany, where the company delivered over 44 tons of renewable hydrogen to a salt cavern storage facility.
Plug Power has already installed a large-scale electrolyzer system at Portugal’s Galp Sines. The 100MW GenEco electrolyzer is designed to convert renewable electricity into hydrogen. It is expected to produce up to 15,000 tons of renewable hydrogen annually, thereby reducing greenhouse gas emissions. Installation marks an important milestone in reducing reliance on fossil fuels and turning towards much cleaner hydrogen.
“The completion of the Sines Refinery project is a defining moment for Europe’s energy transition,” said Benjamin Haycraft, Chief Strategy Officer at Plug Power.
Plug Power Inc. (NASDAQ:PLUG) is building an end-to-end green hydrogen ecosystem, focusing on the production, storage, delivery, and application of hydrogen fuel cell technology. It produces electrolyzers, creates green hydrogen, and deploys fuel cells for material handling, stationary power, and e-mobility, aiming to decarbonize industrial operations.
NIO Inc. (NYSE:NIO) is one of Goldman Sachs’ top penny stock picks. On February 9, NIO Inc. (NYSE:NIO) announced its largest recall yet, affecting 246229 ES8, ES6, and EC6 vehicles produced from 2018 to 2023 due to a software issue that can temporarily disable dashboard and control screens. The recall represents about three-quarters of its 2025 sales and exceeds Xiaomi’s September recall of 115000 SU7 sedans. Nio will address the problem through remote updates or service visits, while Zeekr is also recalling 38277 vehicles over battery safety concerns.
On February 4, NIO Inc. announced that it delivered 27,182 vehicles in January, representing a 96.1% year-over-year increase. The deliveries included 20,894 vehicles under the premium NIO brand, 3,481 units from its family-focused ONVO brand, and 2,807 vehicles from its electric vehicle brand.
The impressive delivery numbers also came on the heels of the company launching its latest version of the NIO WorldModel, an autoregressive model designed to enable smart driving. It has already rolled it out to more than 460,000 vehicles.
In January, the company reached 1 million cumulative deliveries as it continues to invest in core Smarty EV technologies. It’s also expanding its battery swapping and charging infrastructure as it seeks to deliver enhanced smart EV experiences.
The impressive delivery numbers also come as the company continues to push forward with its global expansion. It has already expanded its footprint into Europe, Central Asia, and the Asia Pacific region as it seeks to reach more customers with its smart and sustainable vehicles beyond China.
NIO Inc. (NYSE:NIO) is a Chinese manufacturer of premium smart electric vehicles (EVs) and a pioneer in battery-swapping technology, founded in 2014. It designs, develops, and sells intelligent, high-performance EVs, including SUVs and sedans, while offering innovative services like “Battery as a Service” (BaaS), autonomous driving.
Opendoor Technologies Inc. (NASDAQ:OPEN) is one of Goldman Sachs’ top penny stock picks. On February 9, UBS reiterated a Neutral rating on Opendoor Technologies Inc. (NASDAQ:OPEN) and raised the price target to $5 from $1.60.
The firm described Opendoor’s print as a reset point, maintaining a cautious stance as the company faces challenges in its push to deliver consistent positive unit economics.
While the company continues to face operational and business model bottlenecks, the firm has acknowledged management’s ongoing efforts to address these issues.
“Opendoor’s print is best viewed as another reset point, where revenue is stepping down sharply, EBITDA losses remain elevated, and the company is still working to prove that it can deliver consistent positive unit economics.”
Earlier on January 23, Stephens raised its price target for Opendoor Technologies to $37 from $35 while maintaining an Overweight rating. The price target hike came amid expectations that the company would deliver fourth-quarter 2025 earnings at the high end of guidance. In addition, the company is benefiting from the momentum and excitement around the upcoming lease-return inflection.
Opendoor Technologies Inc. (NASDAQ:OPEN) is a digital platform that modernizes residential real estate transactions by acting as a high-volume “iBuyer” (instant buyer). The company allows homeowners to sell their homes directly to Opendoor for cash, bypassing the traditional, lengthy, and often uncertain process of listing on the open market.
While we acknowledge the potential of OPEN 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 OPEN and that has 100x upside potential, check out our report about this cheapest AI stock.
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