Insider Monkey names seven AI penny stocks most popular with hedge funds

Perfect Corp., which specializes in AI-based solutions for the beauty and fashion industries, is on the list / Photo: Perfect Corp

The consulting firm Grand View Research expects the global AI market to grow from less than $200 billion in 2023 to $1.8 trillion by 2030. Against this backdrop, the tech giants driving AI adoption are Wall Street favorites, making it increasingly difficult to find stocks with untapped potential. Insider Monkey compiled a list of the seven AI stocks priced under $5 that are most popular with “elite” hedge funds.

Nerdy

Nerdy is a platform for live online learning and tutoring with a market capitalization of $192.3 million. It says it uses the latest technology and AI solutions to create personalized courses on 3,000 subjects, with subscriptions to these courses representing the company’s primary source of revenue. In the second quarter of 2024, the top line was $51 million, up 4% versus the same period last year. According to Insider Monkey, the stock is held by 14 hedge funds (all the data below on hedge fund holdings is as of the end of the second quarter 2024).

Lantronix

Lantronix, with a market capitalization of $135 million, describes itself as a global provider of compute and connectivity Internet of Things (IoT) solutions that target high-growth industries, including smart cities, automotive, and enterprise. For instance, its cellular platform works in 185 countries at a fixed price. The company’s net revenue for the fiscal-2024 third quarter, which ended on March 31, rose 25% year over year to $41.2 million. Insider Monkey notes that Lantronix stock is held by 13 hedge funds.

BigBear.ai Holdings

BigBear.ai, with a market capitalization of $397.6 million, develops AI-powered decision intelligence solutions in three key markets – national security, digital identity, and supply chain management – as well as for enterprise operations and manned-unmanned teaming in autonomous systems. In the second quarter of 2024, BigBear.ai’s revenue ticked up 3.4% year over year to $39.8 million. The loss per share came in at $0.05, beating analyst expectations of a $0.07 per share loss, Insider Monkey notes. The stock is held by nine hedge funds.

Perfect Corp.

Perfect Corp., with a market capitalization of $205.7 million, specializes in AI-based solutions for the beauty and fashion industries. It sells brands and end users access to its software, which allows them to virtually try on products, ranging from cosmetics and skincare products to watches. In the second quarter of 2024, the top line was $13.9 million, up 9.6% year over year, driven by higher revenue from AI- and AR-cloud solutions and mobile app subscriptions. The stock is part of nine hedge fund portfolios, according to Insider Monkey.

Inuvo

Inuvo is a provider of AI-driven advertising technology with a market capitalization of $40.7 million. Its clients include brands, advertising agencies, and platforms that buy and sell advertising space. The company claims to have developed the world’s only audience-targeting solution that does not rely on cookies and instead focuses on “why” rather than “who.” It says that the platform does not use confidential data, which is increasingly regulated by governments. Inuvo’s second-quarter revenue grew 9.4% year over year to $18.2 million. The stock is held by two hedge funds.

Predictive Oncology

Predictive Oncology, with a market capitalization of $6.35 million, uses AI to find and develop more effective cancer treatments. For example, its Eagan operating segment uses AI to analyze tumor samples to see how patients respond to drugs and improve treatment results. In the second quarter, the company reported revenue of $279,000, down 43% year over year. The net loss per share, however, improved to $0.68 versus $0.98 a year earlier. Two hedge funds hold stakes in the company, according to Insider Monkey.

Beamr Imaging

Beamr Imaging is a developer of software that enhances video and image quality with a market capitalization of $54 million. Its solutions are used by businesses worldwide, Insider Monkey notes, while the company collaborates with Nvidia, Oracle, and Amazon. In the first half of the year, the top line grew 5% year over year to $1 million, driven by new license agreements. The company expects revenue to reach $3.5 million for the full year. The stock is held by one hedge fund.