3 Under-the-Radar AI Stocks With Market-Beating Potential

6 hours ago 1

Leo Sun, The Motley Fool

Mon, Apr 7, 2025, 9:30 AM 5 min read

The Trump administration's "Liberation Day" tariffs connected astir of America's trading partners precocious deflated galore of the market's hottest artificial quality (AI) stocks. While the AI marketplace should support growing, higher tariffs could unit galore companies to rein successful their spending connected those costly projects until the macro situation stabilizes.

But if we excavation deeper, we'll find immoderate under-the-radar AI stocks that could inactive beryllium worthy accumulating successful this volatile market. Let's look astatine 3 of those AI plays -- Innodata (NASDAQ: INOD), Ambarella (NASDAQ: AMBA), and Symbotic (NASDAQ: SYM) -- and spot wherefore they mightiness bushed the marketplace implicit the agelong term.

Innodata, which went nationalist successful 1993, was considered a slow-growth analytics bundle institution for astir of that past 3 decades. But successful 2018, it launched a suite of task-specific microservices for preparing information for AI applications.

When large tech companies specified arsenic Microsoft and Amazon make a caller AI project, they often walk 80% of their clip preparing the information and conscionable 20% of that clip grooming the algorithm.

To shorten that time-consuming process, 5 of the "Magnificent Seven" companies started to usage Innodata's microservices to cleanable up their information for their AI services. Those contracts caused Innodata's gross and adjusted net earlier interest, taxes, depreciation, and amortization (EBITDA) to surge 96% and 249%, respectively, successful 2024.

Innodata's maturation could dilatory down if the macro headwinds thrust its apical customers to rein successful their AI spending. But implicit the agelong term, it should upwind those challenges and support dominating its high-growth niche of the AI market.

From 2024 to 2026, analysts expect its gross and adjusted EBITDA to turn astatine a compound yearly maturation complaint (CAGR) of 31% and 29%, respectively. But with an endeavor worth of $938 million, it inactive isn't costly astatine 23 times this year's adjusted EBITDA. Therefore, this could beryllium a large maturation banal to accumulate if the marketplace slump continues.

Ambarella is starring shaper of representation processing strategy connected chips (SoCs) and machine imaginativeness chips for information cameras, drones, connected vehicles, and different products. Its SoCs alteration cameras to process precocious prime photos and videos astatine higher speeds, portion its machine imaginativeness chips usage AI to recognize the images they see.

Over the past fewer years, Ambarella's maturation was throttled by U.S. export curbs against immoderate of China's apical information camera makers, macro headwinds for the automotive and Internet of Things (IoT) markets, and contention from different chipmakers.