When we think of Artificial Intelligence, we tend to picture one of two things: legions of skeletal automatons exterminating the human race in a bloodstorm of smoke and laser fire, or, if you’re an investor, big companies like Amazon and Facebook trying to best predict how their customers make purchasing decisions.
But this line of thinking ignores a fundamentally important aspect of AI that investors should keep in mind. Artificial Intelligence isn’t a tool wielded solely by multi-billion dollar corporations. Small-cap tech stocks can also develop, innovate on, and employ AI in ways that disrupt entire industries.
Right now, many of the most promising AI companies are startups. Dozens of them are exploring AI applications that haven’t yet been considered. This means that those startups could control an incredible share of the market if their applications turn out to improve on extant industry practices.
So if Artificial Intelligence strikes you as a smart play—and you’re not particularly concerned about the singularity—don’t discount the small-cap tech stocks that can harness the power of AI in new and lucrative ways.
Small-Cap Tech Stocks: CEVA Inc.
CEVA Inc. (NASDAQ:CEVA) develops and licenses digital signal processors, sensor fusion, and AI processing for semiconductor companies and original equipment manufacturers (OEM). Its applications can be applied to all kinds of AI-based hardware, including mobile devices, computer vision devices, Internet of Things (IoT) devices, autonomous vehicles, and manufacturing equipment.
Most OEM companies, especially those creating circuit boards, can’t afford to develop their own signal processing designs. CEVA, then, earns both license fees and royalties from fulfilling that need. In this way, the company has made an important place for itself in the larger semiconductor industry.
As a small-cap tech stock, CEVA has had a volatile stock price this year, osculating between a $20.64 low and a $32.82 high. CEVA shares are currently priced at $27.24, and with 22 million shares issued and outstanding, the company has a market cap of $600.52 million.
On October 22, CEVA announced that it signed its 100th licensing deal for Bluetooth and Wi-Fi IPs. This is a significant milestone and should factor positively into the company’s Q3 results, which will be released on November 7.
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Small-Cap Tech Stocks: BrainChip
BrainChip Holdings Ltd (OTC:AZKLF) is an Australian pure-play AI company with an intellectual portfolio that consists of 11 patents issued or in process.
One such patent is for BrainChip Studio, which can process millions of images for facial and object recognition purposes in seconds flat. This is an especially useful application for video footage, and BrainChip’s tech is proven to be effective even when the quality of the video is low.
Earlier this week, the company was granted a patent for dynamic neural function libraries. This is a key component of its AI processing chip Akida, which is designed to process data at its source without sending it to a central hub. If Akida proves successful, it could have endless applications and could revolutionize any industry that relies on quick data processing.
Small-Cap Tech Stocks: AcuityAds
AcuityAds Holdings Inc. (TSX:AT) (OTCQX:ACUIF) is a marketing platform that uses AI to programmatically buy the best ad placements for its clients.
AcuityAds’ proprietary AI tech enables its “Decision Science” applications. Through private marketplaces and real-time bidding (RTB) AcuityAds’ technology offers publishing sites perfectly-calculated prices to host its digital display ads.
The company also offers a Consumer Valuing Tool, an algorithm that tracks thousands of signals along the consumer journey and weighs their impact on creating conversions. AcuityAds recently updated this algorithm and has seen an average 15% improvement in campaign ROI.
Like the other small-cap tech stocks mentioned here, AT stock has by no means been stable, but the company is poised for growth as its improved algorithm drives growth. AcuityAds shares are currently trading at $1.20 on the TSX.
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