The Nvidia CEO scandal has shaken confidence in the titans powering artificial intelligence, and that shock is pushing attention toward smaller players building the tools, data plumbing, and automation that AI actually runs on. That shift creates a window for you to look at under followed AI focused small caps. This article breaks down three stocks from our screener that aim to capture that niche and explains the key risks to weigh for each.
The three AI small caps highlighted below are a sample, and the full screen surfaced 38 more listed businesses building machine learning, automation, and data intelligence in ways that could matter just as much for your portfolio. To see the broader opportunity set and start sorting for your own highest conviction ideas, analyze the AI Small Caps screener.
Freshworks (FRSH)
Overview: Freshworks provides AI powered customer and employee experience software, using tools like Freshdesk Omni and Freshservice to automate support and internal workflows.
Operations: Freshworks generates about $934 million from software and programming, with revenue diversified across the United States, Europe, the United Kingdom and Asia Pacific.
Freshworks matters for this AI Small Caps screen because its Freddy AI and EX focused platforms put machine learning directly into everyday service work, and the analyst consensus Narrative on Simply Wall St frames how far that AI momentum may already be reflected in expectations.
“Expanding monetization of Freddy AI, with more than 7,000 paying AI customers, Copilot attach rates above 70% on new EX deals over US$30,000 and higher net dollar retention among EX customers using AI, may be treated by the market as a baseline driver of future revenue and gross margin rather than an optional upside.”
What happens to Freshworks valuation and future returns depends heavily on how one subtle shift in expectations around AI profitability plays out.
That hinges on whether Freddy AI economics keep decoupling from older software assumptions, so read the full narrative for Freshworks to see how that tension could reshape the thesis.
Pony AI (PONY)
Overview: Pony AI runs Level 4 autonomous driving platforms for robotaxis and robotrucks, selling end to end self driving software and services.
Operations: Pony AI generates about US$125 million from software and programming tied to autonomous mobility solutions.
Pony AI fits the AI Small Caps theme because its self driving stacks, domain controllers, and V2X tools put machine learning directly into how taxis and trucks move through cities. The analyst consensus Narrative on Simply Wall St focuses on what wider robotaxi deployment could mean for that business model.
“Scaling of robotaxi fleets in China’s Tier 1 cities and new domestic markets such as Changsha, Hangzhou and additional Greater Bay Area cities is expected to deepen exposure to high value urban mobility demand and support higher aggregate revenue as paid orders build on a growing installed base.”
What happens to Pony AI’s future cash generation and pricing power likely turns on how one unseen regulatory and funding pressure ultimately resolves.
That pressure point is exactly where the story gets interesting, so read the full narrative for Pony AI to see how funding cycles and regulation could affect Pony AI’s trajectory.
Penguin Solutions (PENG)
Overview: Penguin Solutions designs and operates AI focused data center infrastructure and memory hardware, supporting enterprises, governments and neocloud providers worldwide.
Operations: Penguin Solutions generates about $925 million from Integrated Memory, $559 million from Advanced Computing and $249 million from Optimized LED across the US, China, Mexico, Europe and other regions.
Penguin Solutions matters for this AI Small Caps screen because its Advanced Computing and Stratus offerings supply the full stack infrastructure that turns large GPU orders into working AI factories. The analyst consensus Narrative on Simply Wall St sets out how that footprint connects to revenue mix and growth expectations.
“Accelerating adoption of AI and high performance computing across major enterprise verticals, together with Penguin Solutions’ report that AI aligned businesses made up 78% of Q4 FY26 net sales and grew very strongly year over year, keeps the earlier theme of strong turnkey compute demand live and points to further revenue growth potential as these customers scale out AI infrastructure.”
What happens to Penguin Solutions’ earnings power and valuation now turns on how one large working capital and dilution swing shapes future cash generation.
That turning point is where the story for Penguin Solutions gets more interesting, so read the full narrative for Penguin Solutions to see how working capital swings and dilution risk interact with accelerating AI demand.
Seeking Fresh Alternatives Beyond AI Small Caps
Momentum shifts fast in markets. Fresh ideas that look quiet today can be flying once the crowd catches on. Before these themes stop being under the radar, consider researching them early.
- Look into durable income plays before yield hunters focus on them by scanning the 6 dividend fortresses and filtering for businesses where cash payouts are central to the story.
- Identify early movers in artificial intelligence infrastructure by running the 53 AI infrastructure stocks and focusing on enablers that support data centers, chips, and high capacity networks.
- Monitor potential breakout miners while sentiment is still muted by using the 33 elite gold producer stocks to narrow in on established producers with meaningful reserves.
Have feedback on this article? Concerned about the content? Get in touch with us directly.Alternatively, email editorial-team@simplywallst.com
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Mitch Lawler
Mitchell Lawler is a Senior Investment Editor at Simply Wall St, where he oversees Market Insights and the platform’s published editorial content. He also leads The Foxhole, a daily forum for contrarian investment ideas and constructive debate, drawing on nearly a decade of personal investing experience and more than five years in professional equity research and financial publishing.
