3 Small Cap AI Stocks for Your Watch List
- (0:30) - Where Should You Be Investing When Buying Into The AI Trade?
- (2:00) - Tracey's Top Stock Picks
- (17:30) - Episode Roundup: WLDN, DUOT, INOD
- Podcast@Zacks.com
Welcome to Episode #485 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey went solo to talk about AI Revolution stocks beyond the obvious big cap companies like NVIDIA, Micron, Sandisk, and others.
These are companies that are hidden AI plays. Few investors or traders are following them on the chat boards but they have rising earnings and revenue and their business is in AI. They are “small caps” which in the context of this podcast, when comparing against NVIDIA and it’s $5.5 trillion market cap, means a $4 billion market cap or less.
The hyperscalers are planning on spending over $700 billion on the AI buildout in 2026 alone. That money is going to go to more than just NVIDIA. It will trickle down into the AI ecosystem including the buildout of the data centers, power generation, security, and thermal solutions.
No Screen for the AI Small Caps
How do you find great small cap companies which also have AI business? It’s impossible to screen for those criteria on Zacks so it’s a matter of either stumbling across the companies or having a Small Cap Analyst, like Zacks’ Mark Zinski, available to give you some company names.
Mark has been on the Market Edge Podcast several times and first alerted Tracey, and podcast listeners, to Duos Technologies Group and Innodata.
Reminder about small cap companies. They usually don’t have as much analyst coverage as the large caps, which can make it difficult to get information about the company. There are fewer analyst reports and also fewer questions on earnings conference calls.
But investors might want to have a watch list of small cap AI Revolution companies as the buildout continues.
It’s not just large companies seeing a surge in sales in 2026. Don’t rule out the smaller companies who are also big beneficiaries.
3 Small Cap AI Stocks for Your Watch List
1. Willdan Group, Inc. (WLDN)
Willdan Group provides professional technical and consulting services nationwide focusing on utilities, industry and government entities. It recently acquired Burton Energy Group, which serves Fortune 500 companies and will double the company’s services to the commercial market.
Shares of Willdan Group are up 17.2% in the last month after the company beat and raised full year earnings guidance. Willdan has an attractive price-to-earnings (P/E) ratio of just 20.4. That is lower than most of the AI growth stocks which are trading above 25.
Should a consulting firm like Willdan be on your watch list?
2. Duos Technologies Group, Inc. (DUOT)
Duos Technologies Group is a true small cap company with a market cap of just $250 million. It is a provider of modular, colocation Edge and AI data centers and technology infrastructure solutions.
In 2025, Duos Technologies had record revenue. It will report first quarter of 2026 results on May 18, 2026, so there will be an update on the AI business shortly. Earnings are expected to rise 106.3% in 2026 but Zacks only has one analyst providing estimates on Zacks.com.
Duos Technologies said that 2025 was a pivotal year of transformation. Shares are up just 11.5% over the last year as the Street waits for confirmation that the AI business is growing.
Should a small cap infrastructure company like Duos Technologies be on your watch list?
3. Innodata Inc. (INOD)
Innodata provides global data engineering solutions. It believes data and AI are linked. Innodata has a market cap of $3 billion. On May 7, 2026, Innodata reported record first quarter results. Revenue jumped 54% year-over-year.
Innodata raised full year revenue growth to 40% or more, up from its prior guide of 35% or more.
Shares of Innodata soared 130.6% in the last month on the news. It’s not cheap on a P/E basis with a forward P/E of 111. A P/E over 100 is an extremely expensive company.
But investors are banking on the 40% sales growth in 2026.
Should a data engineering company like Innodata be on your watch list?
What Else Should You Know About Small Cap AI Stocks?
Tune into this week’s podcast with Tracey and John to find out more.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>This article originally published on Zacks Investment Research (zacks.com).
