The AI hype is real. Top 4 smallcap stocks poised for explosive growth

From its ability to craft professional headshots to generating captivating content, AI's potential seems limitless. While some trends fizzle out over time, others, like AI, possess the power to transcend fleeting fancies.

Companies reporting consistent revenue and profit growth fuelled by AI integration are the ones poised for long-term success.

The buzz surrounding AI isn't just a whisper. Tech giant Nvidia has become a household name due to its astronomical rise in value, largely driven by its pioneering work in AI technology.

This isn't an isolated incident. Countless companies are scrambling to embrace AI's transformative power. In fact, even smallcaps are aggressively embracing AI’s power.

With this, in this article, we will look at smallcap AI stocks poised for exclusive growth.

#1 Newgen Software

Newgen Software Technologies is a global software company engaged in the business of product development, like designing and delivering end-to-end solutions covering the entire workflow automation from document management to imaging.

They operate in intelligent automation, a field where AI plays a critical role in streamlining business processes.

Instead of offering standalone AI solutions, Newgen integrates AI functionalities into its core platform, NewgenONE.

The company has set up its proprietary platform called, Newgen One, a unified low code cloud-based digital transformation platform that helps customers digitally build their enterprise experience.

A low code is a visual approach that creates applications that require little to almost no coding.

Having the low code Newgen platform, it can be customised to cater to every customised requirement. Also, having low code means that enterprises can run their applications with minimal training.

The core products of the NewgenONE platform are contextual content services, low code process automation (BPM), omnichannel customer engagement (CCM), and artificial intelligence cloud.

The platform helps develop and deploy complex, content-driven, customer-engaging business applications on the cloud. The platform has a wide spectrum of use cases across industries from onboarding to service requests, lending to underwriting, and many more.

Further, Newgen leverages AI-powered chatbots to provide 24/7 customer support and personalized interactions.

Newgen, on 30 May 2024, launched LumYn, a Gen AI-powered hyper-personalisation platform designed specifically for thebankingsector.

The company claims this growth intelligence platform is set to enhance profitability and significantly improve customer experiences for banks worldwide.

The company's primary clients are from the banking segment, accounting for 66% of Newgen's revenue, followed by 9% from government & PSUs, and 8% from the insurance sector.

Moving forward, the company plans to improve its existing products and launch new ones for its AI portfolio.

#2 Zensar Technology

It is a leading technology and digital solutions company that offers a range of integrated information technology (IT) and business process outsourcing (BPO) products and services.

Zensar is concentrated on catering to three industries. These are hi-tech and manufacturing, banking, financial services and insurance, and consumer services.

Zensar Technologies entered the artificial intelligence field in August 2019. The company has developed deep learning-based solutions for industries such as BFSI, retail, and manufacturing.

Zensar leverages AI in data engineering, analytics, and demand forecasting for products based on historical sales and real-world data.

Additionally, Zensar has created a groundbreaking solution that combines AI with Geographic Information Systems (GIS) to identify potential excavation hazards, thereby preventing accidents.

The company’s advanced engineering division has created anAI engineering buddy,in partnership with Microsoft. It unlocks the power of GPT models powered by the Azure OpenAI ecosystem, which offers high-quality solutions that increase users’ efficiency by at least 30%.

Going forward, the company plans to expand to new geographies and offer its clients innovative solutions using emerging technologies.

#3 Birlasoft

The company is a software development and IT consulting firm that combines the power of domain, enterprise and digital technologies to reimagine business processes for customers and their ecosystem.

Its services include data analytics, cloud, blockchain, intelligent automation, business intelligence (BI), enterprise technologies, and services.

Birlasoft offers its services to customers in various industries, such as banking, financial services, insurance, energy, utilities, life sciences, and manufacturing.

Birlasoft formed a collaborative venture with Microsoft Azure OpenAI Service as part of the $2.9 bn CK Birla Group strategic initiatives in January 2023.

The venture was strategically designed to accelerate value creation and stimulate innovation in the adoption of Generative AI.

The company on 5 February 2024, launched its Generative artificial intelligence (Gen AI) platform Cogito to deliver enterprise solutions to automate processes, generate innovative content, enhance decision-making, and boost overall business performance.

Cogito leverages AI algorithms, machine learning, and deep learning to optimise businesses in areas like supply chain management, customer behaviour prediction, and product design.

#4 Nucleus Software Exports

It's an Indian IT company in the banking and financial services sector. It offers IT and consultancy services serving a variety of sectors of the banking industry.

Headquartered in Noida, the company operates in over 50 countries, offering IT and consultancy services across various segments of the banking industry.

Nucleus Software has been quietly integrating AI into its offerings to enhance efficiency, security, and customer experience within the financial sector.

Their AI-powered smart platform is designed to help build intelligent solutions that boost productivity, improve user experience, and enhance security.

By leveraging AI and machine learning algorithms, Nucleus Software's solutions can analyse transactional and environmental data in real-time to identify potentially fraudulent activities.

This empowers financial institutions to prevent financial losses and enhance customer security.

Additionally, their AI capabilities allow for the analysis of vast amounts of financial data, enabling institutions to make informed decisions on risk mitigation, resource allocation, and product development.

Conclusion

Investing in AI small-cap stocks can be a strategic move due to their high growth potential and innovative capabilities.

Smallcaps often have significant room for growth compared to larger, more established firms.

In the rapidly evolving AI field, these companies can offer substantial returns as they innovate and capture market share.

Being at the forefront of technological advancements, smallcaps are more agile and quicker to implement cutting-edge AI technologies, giving them a competitive edge.

Additionally, many smallcap AI stocks may be undervalued or overlooked by larger investors, presenting opportunities to invest at a lower price before these companies gain broader recognition.

Including smallcap AI stocks in your portfolio also provides diversification benefits, as the AI sector's growth spans various industries, reducing the risk associated with any single sector.

The AI industry is projected to grow exponentially in the coming years, and investing in small-cap AI stocks allows you to be part of this growth story from an early stage.

These companies have the potential to disrupt existing markets and create new ones, leading to paradigm shifts in how industries operate.

However, investing in smallcap AI stocks comes with certain risks.

These stocks tend to be more volatile and can experience significant price fluctuations, which can lead to substantial losses.

Small-cap stocks also often have limited financial resources, making them more vulnerable to market downturns and operational challenges.

Balancing the potential for substantial returns with the associated risks is key to making informed investment decisions in this dynamic sector.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com