10 Under-the-Radar Artificial Intelligence (AI) Stocks Worth a Closer Look

Core Insights - Artificial intelligence (AI) is transforming industries and business operations, with significant attention and capital concentrated among major tech companies, referred to as the "Magnificent Seven" [2] - A new wave of smaller companies is integrating AI into specific workflows, focusing on practical applications rather than hype, presenting investment opportunities in various sectors [3][9] Company Summaries - BigBear.ai (NYSE: BBAI): Provides AI-powered analytics for defense and enterprise clients, converting Department of War backlog into revenue. The company faces federal budget uncertainty, which may lead to revenue volatility [5] - Innodata (NASDAQ: INOD): Specializes in data preparation and annotation services for AI model training, benefiting from operating leverage as demand scales. Once infrastructure is established, additional revenue contributes directly to profits [6] - Cerence (NASDAQ: CRNC): Develops voice assistants and generative-AI interfaces for automakers, achieving five consecutive quarters of positive free cash flow. Revenue is contingent on car production and automaker budgets, with potential for steady growth if conditions remain favorable [7] - Rekor Systems (NASDAQ: REKR): Utilizes AI for traffic management through automated license plate recognition and roadway analytics. Revenue from municipal customers can be inconsistent, but there are opportunities for margin improvement through platform upselling [10] Market Trends - Smaller AI companies provide targeted exposure to niche markets without the high valuations typical of larger tech firms. Many of these companies are either profitable or nearing breakeven, generating real revenue from enterprise clients [9]