Is Innodata Well-Positioned for America's Accelerating AI Spend?

Innodata Inc. INOD appears increasingly well-aligned with the rapid expansion of U.S. AI investment, supported by strong operating momentum and a business model tightly coupled to generative AI development. In the third quarter of 2025, the company delivered record revenues of $62.6 million, up 20% year over year, while adjusted EBITDA rose to $16.2 million, representing a healthy 26% margin. This is clear evidence of operating leverage as AI-related demand scales.

The core of Innodata’s positioning lies in its role as a picks-and-shovels provider to large AI model builders. Management highlighted expanding relationships with major Big Tech customers, including multiple foundation model developers, and reiterated guidance for 45% or more organic revenue growth in 2025, with expectations for “transformative” growth in 2026. Recent investments in high-quality pre-training data are already yielding tangible returns, with contracts signed or expected that could generate approximately $68 million in future revenues, largely flowing into 2026.

Innodata is also positioning itself to benefit directly from accelerating federal AI adoption. The launch of Innodata Federal targets U.S. defense and civilian agencies, with an initial high-profile project expected to contribute around $25 million in revenues, mostly in 2026, aligning with Washington’s push to streamline AI procurement. Backed by a $73.9 million cash balance and no debt, the company has ample flexibility to invest ahead of demand.

Taken together, Innodata’s deep ties to Big Tech, expanding federal footprint and early leadership in critical AI data services suggest it is well-positioned to capture a meaningful share of America’s accelerating AI spend.

Innodata’s Competitive Landscape in AI Data & Services

Innodata operates in a competitive niche where high-quality data and AI services are increasingly strategic. Globant SA GLOB and Cognizant Technology Solutions CTSH are two relevant competitors.

Globant SA has been expanding its AI capabilities through strategic investments and acquisitions, particularly in generative AI consulting and data engineering services. Globant’s emphasis on digital transformation and AI-driven solutions positions it directly alongside Innodata in servicing enterprise AI initiatives. Globant’s broad global client base and software development expertise allow it to compete for large-scale AI data projects, making it a formidable peer.

Cognizant Technology Solutions also competes for AI spend with its extensive IT consulting and business process services, including AI integration and data modernization. Cognizant’s scale and comprehensive suite of AI services help it capture enterprise and government contracts that overlap with Innodata’s target markets.

Both Globant and Cognizant are expanding AI-related offerings — Globant through productized AI capabilities and Cognizant through end-to-end digital transformation services — making them key benchmarks for assessing Innodata’s competitive positioning.

INOD’s Price Performance, Valuation & Estimates

Shares of Innodata have gained 34.1% in the past year compared with the industry’s 4.4% growth.

INOD 1-Year Price Performance

From a valuation standpoint, INOD trades at a forward price-to-earnings ratio of 44.33, much higher than the industry’s average of 16.99.

P/E (F12M)

The Zacks Consensus Estimate for INOD’s 2025 and 2026 earnings has increased to 89 cents (from 78 cents) and $1.20 (from $1.18) in the past 60 days. The company reported 89 cents in 2024.
 

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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