Is Innodata Stock's 4.65X PS Still Worth it? Buy, Sell, or Hold?

Core Viewpoint - Innodata (INOD) shares are trading at a premium with a forward 12-month Price/Sales (P/S) ratio of 4.65X, significantly higher than the Zacks Computer Services industry average of 1.79X [1][8]. Financial Performance - Innodata shares have declined 0.8% year to date (YTD), underperforming the industry and the Zacks Computer & Technology sector, which returned 1.4% and 1.1% respectively [6][8]. - The Zacks Consensus Estimate for second-quarter 2025 earnings is 11 cents per share, down 39% over the past 60 days, compared to break-even earnings in the year-ago quarter [12]. - The consensus mark for 2025 earnings is 69 cents per share, reflecting a 6.8% decrease over the past 60 days, indicating a 22.47% year-over-year decline [12]. Investment and Growth Strategy - The company plans to invest $2 billion in AI technology to support its largest customer in the second quarter of 2025 [10]. - Innodata's Generative AI Test & Evaluation Platform, powered by NVIDIA technology, aims to enhance AI trustworthiness and accelerate model development [13]. - The company expects 2025 revenues to increase by 40% year over year to $238.6 million, driven by an expanding clientele [16]. Market Position and Client Acquisition - Innodata is expanding relationships with key customers, including securing approximately $8 million in new engagements from four Big Tech customers [14]. - The company is onboarding major clients in enterprise tech, cloud software, digital commerce, and healthcare technology, which are expected to provide significant growth potential [15]. - Innodata serves the generative AI IT services market, projected to be worth $200 billion by 2029, indicating substantial growth prospects [17].