|
|
|
|
|||||
|
|
|
New: Introducing “Why Is It Moving?” - lightning-fast, AI-driven explanations of stock moves
Smaller AI stocks offer targeted exposure to specific niches without the valuation premiums attached to most megacap names.
Several of these companies are already profitable or approaching breakeven, generating real revenue from enterprise customers rather than burning cash on promises.
AI features embedded in established business models can drive margin expansion as adoption scales across existing customer bases.
Artificial intelligence (AI) stands as the defining technological invention of our time, reshaping everything from how we work to how businesses operate. The early winners -- composed mostly of the "Magnificent Seven" tech giants -- have captured the lion's share of attention and capital, driving market caps to record levels. But the AI revolution is moving beyond these household names.
A new wave of smaller companies is embedding AI into specific workflows where practical applications matter more than hype. These 10 stocks offer exposure to AI's expansion into defense analytics, data preparation, customer service, and enterprise software at valuations that reflect skepticism rather than euphoria.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: Getty Images.
From picks-and-shovels plays in model training to platforms automating incident response, these companies stand to benefit as AI adoption broadens beyond the megacaps.
BigBear.ai (NYSE: BBAI) delivers AI-powered analytics for defense and enterprise customers. The company converts the Department of War backlog into revenue while cleaning up filings and setting up guidance that could trigger another valuation inflection. Defense contract wins provide sticky revenue, though federal budget uncertainty creates volatility.
Innodata (NASDAQ: INOD) provides data preparation and annotation services that feed AI model training pipelines. This pure-play exposure to model training demand delivers operating leverage as volumes scale -- once the infrastructure is built, additional revenue flows straight to the bottom line with minimal extra cost.
Cerence (NASDAQ: CRNC) builds the voice assistants and generative-AI interfaces used by automakers. The company has posted five straight quarters of positive free cash flow and is rolling out its xUI platform. Financial results still depend on car production and on automaker spending. If production or automaker budgets soften, revenue can slow even with new wins. If they hold up, those programs can support steadier growth.
Rekor Systems (NASDAQ: REKR) applies AI to traffic management through automated license plate recognition and roadway analytics. Municipal customers create lumpy revenue, but platform upselling opportunities offer margin improvement potential if execution improves.
Veritone (NASDAQ: VERI) runs aiWARE, a platform that can plug into and coordinate many AI models at once for media and enterprise clients. The company also offers tools to manage and monetize media rights, including its Digital Media Hub storefront for licensing video, audio, and images.
Veritone's advertising arm works with brands and creators using aiWARE to plan and optimize campaigns. If Veritone can steady growth and turn more of this platform activity into recurring revenue, the upside could be meaningful as customers use aiWARE for more jobs and content monetization.
eGain (NASDAQ: EGAN) provides AI-powered customer service and knowledge management software. Its Knowledge Hub is the core, and add-ons like AssistGPT and AI Agent bring generative AI into answers, guidance, and self-service -- creating clear upsell paths to increase spend from existing customers. If adoption of these GenAI features continues, eGain can lift average revenue per customer and recurring revenue from a modest base.
ON24 (NYSE: ONTF) pairs AI-assisted digital events with marketing workflow automation on its Intelligent Engagement Platform. The company's tools repurpose event content with AI, personalize experiences, capture first-party engagement data, and feed it into sales and marketing systems to drive pipeline and lead quality.
Kaltura (NASDAQ: KLTR) runs an enterprise video platform with AI search, personalization, and analytics. Its business and education customers provide steady demand, and new AI features support higher pricing and larger accounts. With a largely fixed cost base, even small price-mix gains can expand margins meaningfully from today's levels.
PagerDuty (NYSE: PD) delivers AIOps -- AI-assisted operations -- for incident response and automation. If its tools keep reducing alert "noise" and trigger more automated fixes, customers are more likely to stay and spend more. That could lift net expansion rates and support a higher valuation multiple closer to other enterprise software peers.
Sprinklr (NYSE: CXM) operates an AI-driven customer-experience platform that encompasses both contact centers and social media management. Its generative-AI copilots and automated care tools help agents work faster and handle more cases, which can widen margins and make the platform stickier versus single-purpose competitors in a crowded market.
Not all of these 10 stocks will succeed. Rekor and Veritone carry real execution risk, Cerence is tied to an auto cycle that must improve, and BigBear relies heavily on government contracts.
However, spreading capital across several AI infrastructure plays can capture upside without paying megacap premiums. While Wall Street chases the obvious names, these companies are quietly embedding AI where it actually makes money.
Before you buy stock in BigBear.ai, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BigBear.ai wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,979!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,122,746!*
Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 187% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of October 7, 2025
George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Cerence. The Motley Fool has a disclosure policy.
| 1 hour | |
| 2 hours | |
| 3 hours | |
| 10 hours | |
| 10 hours | |
| Oct-12 | |
| Oct-12 | |
| Oct-12 | |
| Oct-10 | |
| Oct-10 | |
| Oct-10 | |
| Oct-10 | |
| Oct-10 | |
| Oct-09 | |
| Oct-09 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite