5 Small Cap AI Stocks to Trade in 2025

Key Takeaways

• There are more and more small cap AI stocks that focus on the development and infrastructure of the industry rather than the products themselves
• We analyzed each stock's revenue and profit-to-sales ratio to gain a better understanding of each stock's value in the market
• We see companies working on quantum technology as showing strong signs of potential future growth, especially in the field of AI

Introduction

It has become a very exciting time, with the onset and rise of artificial intelligence (AI) popping up across all walks of life. As investors, we are always searching for the best opportunities. Away from the top soaring AI stocks. I recently found great future potential in these small cap AI stocks, which I think will benefit your portfolio throughout 2025.

What are small cap AI stocks?

In essence, they are no different from large-cap stocks, or any other stocks for that matter. Small-cap AI stocks are generally stocks of companies that focus on AI as their products or services. The differentiator will be down to where they are listed, similar to penny stocks, and the overall valuation of the AI stock.

What is considered a small cap AI stock?

Generally, a small cap stock is considered to have a market cap of between $250 million and $2 billion USD. Our criteria are based on:

• The size of the stock's market cap must be between $250 million and $2 billion as of writing this article.
• The company must be engaged in the development or sale of AI-related products or services.
• For intent purposes, we have also selected these stocks based on being US-listed.

Understandably, you may have more criteria that you follow when selecting these types of stocks. There are certainly more ways to screen out stocks based on more in-depth criteria. However, I have found this to be the fastest way to identify the small cap stocks I am looking for.

List of our chosen stocks

Product introduction

Sonos Inc (SONO)

Sonos is a company that specializes in sound products such as speakers, headphones, and stereos. Their products contain embedded AI for speech-to-function activities, similar to how the Alexa home system works.

The Sonos voice assistant AI is an extremely limited feature and is entirely restricted by its scope of knowledge to the music industry, leading to other voice-aided competitors to outbeat Sono's AI. This could be a reflection of its recently declining YoY revenues and profit margins.

With a roughly 8.4% decrease in revenue through 2024 vs 2023, and a 3.7% decrease in profit margins over the same period, Sonos's stock might be in trouble. However, with revenue of $1.54 billion and a $1.7 billion market cap indicating a 1.12 profit-to-sale (P/S) ratio, this signals a potentially strong buying opportunity in the stock.

Knowles Corp (KN)

Knowles Corp is another company that focuses on sound, but in a different sense. They develop audio and precision devices designed for consumers and businesses in the electronics, MedTech, and defence industries.

The company has recently directed its focus toward the AI industry, developing products for AI speech, audio, sensor, and vision applications. Their more commonly known processing chip the AISonic™ IA8201 is an industry-first mobile-centric audio processor.

With a 4.2% increase in revenue between Q1 and Q2 of 2024, the company is showing small signs of growth. With a P/S ratio of 2.32 Knowles's stock price is still below the overvalued range. However, this stock may be good for short-term trading rather than long-term depending on the company's financial results.

D-Wave Quantum Inc (QBTS)

D-wave is a company focused on developing quantum technology and offering it to businesses around the world. They offer access to a quantum computer that has 5000 qubits and 1 million variables and offer 100s of applications via their cloud services.

In a world where quantum computing has not yet become mainstream, D-wave has a long way to go. Most recently, the Founder and CEO of Nvidia proclaimed quantum technology will not be fully accessible for at least another 30 years. This negative sentiment echoed across the stock market, leading to a drop in quantum stocks.

On the other hand, although investors can only speculate, many people are bullish on quantum technology's future prospects, leading to D-wave being a strong contender to see growth throughout 2025 and over the next several years, as the technology matures.

Marqeta (MQ)

Marqeta is a fintech company focusing on offering payment infrastructure to its clients, through customizable platforms that suit the needs of businesses and enterprises, allowing businesses to build their own financial platforms to streamline their financial payment needs.

Marqeta's generative AI is built based on OpenAI's large language model (LLM) and is designed as a Q&A tool for Marqeta's customers to better navigate and integrate its platform into their businesses.

In Q3 of 2024 Marqeta saw an 18% increase in revenue compared to Q3 of 2023, marking slight growth in sales. However, the company's P/S ratio is at 3.87, indicating the stock is potentially overvalued. If you're looking to trade Marqeta stock, it might be worth waiting for a lower entry point.

Silicon Motion Technology Corp (SIMO)

Silicon Motion is a company that specializes in storage solutions, most notably solid-state drives (SSDs). The company's products offer solutions for many types of industries, from consumer electronics to storage solutions for autonomous cars.

The company has announced its dedication to providing more storage solutions for AI applications looking to store and access large amounts of data and information. This has led to investor speculation on the stock in the hopes of seeing an increase in sales.

Silicon Motion has seen consistent growth in revenue between Q1 and Q3 of 2024. Marketing a steady increase in sales throughout the year. With a P/S ratio of 2.09, the company is hovering between the undervalued and overvalued zones. This small cap AI stock might be worth monitoring throughout 2025.

Value Editorial

It can often be daunting when researching AI stocks, considering many of them are basically wrappers of OpenAI's LLM. However, you must look closer at the industry as a whole, as there is a wide variety of infrastructure needed to develop and maintain the growth of AI applications.

For example, companies such as D-wave may widen the scope in which AI can run its calculations bringing us new innovative technologies in the field of medicine and robotics. Or with companies such as Silicon Motion that offer storage solutions for AI-based data and information.

A lot of these small cap AI stocks have potential, albeit a lot of speculative potential, and there are hundreds more small cap AI stocks out there that you can find yourself by using platforms such as Intellectia, an AI-driven insights tool for investors such as yourself.

Frequently Asked Questions

What are small cap AI stocks?

Small cap AI stocks are stocks that focus on the sale or development of AI applications, and have a market capitalization of between $250 million and $2 billion USD.

Which AI stock will boom?

This is difficult to gauge, however, there have been significant returns from quantum computing stocks such as D-wave, Rigetti,

Is small-cap worth investing?

Usually, small cap stocks can offer lucrative returns. However, due to their volatility and market swings, they can be considered high-risk investments. Investing in small cap stocks depends on your risk appetite.

Conclusion

As we can see, there are multiple AI stocks with small market caps that could potentially be traded throughout 2025. As the industry continues to grow, the likelihood we will see other AI companies listing on the stock market will increase. It's best you keep monitoring the latest news and conducting your own due diligence before investing.