The Sneaky AI Stocks You Should Be Watching

The artificial intelligence (AI) boom continues to propel the stock market on a multi-year rally, and it’s clear we’re only scratching the surface of this transformative technology. Grand View Research is predicting an astonishing **36.6% annualized growth rate for the AI industry from now until 2030**. While it’s easy to focus on behemoths like Nvidia (NASDAQ:NVDA), savvy investors need to keep their eyes peeled for other promising stocks that have yet to garner mainstream recognition.

Understanding the Growth Potential

Over the years, Nvidia has set the bar high when it comes to AI investments, rewarding early supporters handsomely. However, the spotlight on this tech giant often overshadows equally valuable, lesser-known stocks that could outperform the market leader. As the AI landscape evolves, it’s crucial to identify select stocks that are effectively positioned to capture growth while still flying under the radar.

Three Sneaky AI Stocks to Keep on Your Radar

1. Innodata (INOD)

First on the list is Innodata (NASDAQ:INOD). This company is making waves as it has outperformed Nvidia on a year-to-date basis and over the past five years. With a market cap sitting under $2 billion, Innodata specializes in processing and organizing data that forms the backbone of large language models such as ChatGPT.

This stock operates as the “picks and shovels” supplier for generative AI, positioning itself perfectly as big tech companies seek assistance in training their AI models. The company recently reported an astounding **136% revenue surge year-over-year in Q3 2024**, leading to an upward revision in their annual guidance. Furthermore, its net income exploded from a modest $383k in Q3 2023 to **$17.4 million in Q4 2024**, representing an almost **4,600% year-over-year increase**. With a robust **33.3% net profit margin**, Innodata is just gearing up for serious hypergrowth, and the stock appears set to soar higher.

2. TSS (TSSI)

Next, we have TSS (NASDAQ:TSSI), a hidden gem despite an enormous **5,500% increase over the past year**. With a market cap of just **$350 million**, TSS is rapidly evolving its business model, reporting a nearly **700% quarterly revenue increase** and a net income surge of over ten-fold.

TSS specializes in providing end-to-end technology services for data center technology providers, and its multi-year partnership with Dell (NYSE:DELL) reinforces its growth trajectory. Although Dell currently contributes all of TSS’s revenue, this bond is critical for establishing visibility and trust. If TSS capitalizes on this relationship, it could open doors to additional clients. As financial growth accelerates, the company’s price-to-earnings (P/E) ratio is expected to drop significantly.

3. Vertiv Holdings (VRT)

Finally, let’s discuss Vertiv Holdings (NYSE:VRT), the largest company on our list with a substantial **$40 billion market cap**. Vertiv provides essential products and services for data centers, including innovative liquid cooling solutions. They saw a **77% year-over-year increase in diluted EPS in Q4 2024**, with revenue climbing **26%** during the same period.

The stock took a hit following earnings release, primarily due to analysts’ less-than-favorable guidance. However, this provides a golden opportunity for investors willing to buy on the dip. As data centers expand—especially with the AI revolution in full swing—Vertiv stands to snag significant market share. Moreover, with the stock down by **more than 25% since recent news**, the overreaction may present a prime buying opportunity.

Adding to the excitement is the potential for Vertiv to be included in the S&P 500. As one of the largest public companies meeting inclusion requirements, securing a spot in this benchmark index could see institutional fund managers scrambling to cover their positions in Vertiv, driving the stock price higher.

Conclusion

As the world leans more into the AI revolution, the investment possibilities in this sector are vast, and the stocks mentioned above exemplify untapped potential. While Nvidia has made headlines, the landscape is rich with alternatives that could yield substantial returns for those willing to look beyond the obvious. Whether it’s Innodata’s ingenious infrastructure, TSS’s explosive growth, or Vertiv’s established presence, savvy investors would do well to keep these sneaky stocks on their radar as we forge ahead into the future of artificial intelligence.