Will New Big Technology Engagements Reshape Innodata's Growth Path?

Innodata Inc. INOD is strengthening its position as a key partner in the artificial intelligence (“AI”) ecosystem. The company has built strong relationships with leading global technology firms, where demand for high-quality data services continues to rise. As AI advances toward more complex applications, these partnerships have the potential to significantly alter the company’s growth trajectory.

In the second quarter of 2025, Innodata reported several new projects with its largest customer under a recently signed statement of work. Revenues from this customer totaled $33.9 million in the quarter and the company noted that this arrangement could provide access to an even larger pool of generative-AI opportunities. Alongside this, a new large technology customer is expected to contribute about $10 million in the second half of 2025 compared with only $0.2 million over the entire trailing 12-month period. This signals a step-change in how quickly new accounts can scale.

The company also highlighted a late-stage pipeline of additional engagements with other technology firms, underscoring the broadening of its revenue base. Such traction indicates that Innodata is positioned to capture a greater share of industry spending on training and evaluation data.

These developments point toward a growth profile that is increasingly tied to deep collaborations with the world’s largest technology companies. If execution continues, the company could transition from dependence on individual projects to becoming an embedded partner in its customers’ long-term AI strategies. This shift may redefine the pace and durability of Innodata’s expansion.

Rivals Push Boundaries in AI Services

Innodata operates in a rapidly expanding AI services market where established technology leaders are also advancing their capabilities. Two notable competitors shaping this landscape are Microsoft Corporation MSFT and Palantir Technologies PLTR.

Microsoft has been expanding its Azure OpenAI Service and Copilot ecosystem, offering enterprise-scale generative AI solutions. The company is also progressing toward agentic AI by embedding reasoning, planning and autonomy into workflows. Microsoft’s global infrastructure, extensive customer base and significant financial resources provide a scale advantage that is difficult for smaller firms to match.

Palantir, on the other hand, is focusing on its Artificial Intelligence Platform, which integrates data management with autonomous decision-making. This positions Palantir strongly in high-stakes areas such as government and large-scale enterprise contracts. The company’s emphasis on agentic AI further strengthens its competitive stance.

INOD’s Price Performance, Valuation & Estimates

Shares of Innodata have gained 40.4% in the past three months, against the industry’s decline of 3.1%.

INOD Three-Month Price Performance

From a valuation standpoint, INOD trades at a forward price-to-sales ratio of 7.02, higher than the industry’s average of 1.68.

The Zacks Consensus Estimate for INOD’s 2025 earnings per share (EPS) implies a year-over-year decline of 6.7%, while the same for 2026 indicates an increase of 38%. The EPS estimates for 2025 and 2026 have increased in the past 60 days.

INOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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