The emergence of Artificial Intelligence (AI) is proving to be revolutionary…..entirely reshaping industries across the globe. With the significant utility offered by AI in boosting productivity, reducing labor costs while also adding extraordinary efficiency to operations for business operating in a range of markets and sectors, it is no surprise that there has been such a huge flock of investors looking for opportunities to capitalize on this emerging market. While tech giants like Nvidia and Microsoft dominate headlines, small-cap AI stocks offer a unique opportunity to get in on the ground floor of the AI boom. These smaller companies often also turn out to be a huge source of innovation within the industry while also developing niche solutions catered to targeted clientele. Here are two promising small-cap AI stocks that could be game-changers in your portfolio.

1.Veritone, Inc. (NASDAQ: VERI)

Market Cap: ~$250 million

Veritone, Inc. despite being a relatively small player in the AI space, continues to carve out a significant market for itself with its proprietary AI platform, aiWARE. Through this platform the company has been able to cater a number of prominent industries such as media, advertising, law enforcement, energy etc. by allowing them to automate content analysis, transcription, management etc. through processing and organizing a large number of datasets with Veritone’s technology.

The company’s strong partnerships with government agencies and media giants signal that demand for its AI solutions is growing. With AI becoming more integral to content creation and management, Veritone’s stock presents an intriguing opportunity for growth-focused investors who believe in the power of AI to transform multiple sectors.

Why Buy Now: Vertione remains at the forefront of the AI-driven automation for the data processing market and continues to cater to an increasing scale of industries with a rapidly growing user and customer base that could lead to a breakout for the company over the company years.

2. BigBear.ai Holdings, Inc. (NYSE: BBAI)

Market Cap: ~$170 million

BigBear.ai Holdings, Inc. specializes in AI-driven analytics and decision-making support for both commercial and government clients. Its technology helps organizations predict future outcomes, optimize operations, and reduce risks through advanced data analysis. The company operates in sectors such as defense, manufacturing, healthcare, and logistics, offering AI-powered tools that can transform decision-making processes.

One of BigBear.ai’s key strengths is its heavy involvement in government contracts, particularly with U.S. defense and intelligence agencies. Given the increasing focus on AI in national security and military applications, BigBear.ai stands to benefit from continued government investment in these areas. The company has also been expanding its footprint in the commercial sector, providing AI tools for supply chain optimization and cybersecurity — two areas where AI has immense transformative potential.

BigBear.ai’s focus on both predictive analytics and real-time decision-making gives it a competitive edge in the growing AI industry. With AI becoming more crucial in sectors that require precision and rapid response, such as defense and healthcare, BigBear.ai could see its market cap grow as its technology becomes more widely adopted.

Why Buy Now: BigBear.ai is at the intersection of AI and national security, a combination that could lead to steady, long-term growth. With government backing and a growing commercial presence, this stock offers an intriguing mix of stability and growth potential, particularly as AI becomes central to critical decision-making processes in numerous industries.

Final Thoughts

Small-cap stocks often come with a higher level of risk, but the reward potential is just as substantial. Both Veritone and BigBear.ai offer exposure to the burgeoning AI market without the hefty price tags of larger tech companies. As AI continues to revolutionize industries, these two small-cap stocks could deliver outsized gains for investors willing to take a calculated risk. Keep an eye on their innovation, partnerships, and market expansion to ride the wave of the AI revolution.