Artificial intelligence (AI) stands as the defining technological invention of our time, reshaping everything from how we work to how businesses operate. The early winners -- composed mostly of the "Magnificent Seven" tech giants -- have captured the lion's share of attention and capital, driving market caps to record levels. But the AI revolution is moving beyond these household names.
A new wave of smaller companies is embedding AI into specific workflows where practical applications matter more than hype. These 10 stocks offer exposure to AI's expansion into defense analytics, data preparation, customer service, and enterprise software at valuations that reflect skepticism rather than euphoria.
Image source: Getty Images.
From picks-and-shovels plays in model training to platforms automating incident response, these companies stand to benefit as AI adoption broadens beyond the megacaps.
The defense intelligence play
BigBear.ai (BBAI 21.81%) delivers AI-powered analytics for defense and enterprise customers. The company converts the Department of War backlog into revenue while cleaning up filings and setting up guidance that could trigger another valuation inflection. Defense contract wins provide sticky revenue, though federal budget uncertainty creates volatility.
The AI training enabler
Innodata (INOD -1.92%) provides data preparation and annotation services that feed AI model training pipelines. This pure-play exposure to model training demand delivers operating leverage as volumes scale -- once the infrastructure is built, additional revenue flows straight to the bottom line with minimal extra cost.
The automotive AI supplier
Cerence (CRNC 6.95%) builds the voice assistants and generative-AI interfaces used by automakers. The company has posted five straight quarters of positive free cash flow and is rolling out its xUI platform. Financial results still depend on car production and on automaker spending. If production or automaker budgets soften, revenue can slow even with new wins. If they hold up, those programs can support steadier growth.
The traffic intelligence specialist
Rekor Systems (REKR 2.46%) applies AI to traffic management through automated license plate recognition and roadway analytics. Municipal customers create lumpy revenue, but platform upselling opportunities offer margin improvement potential if execution improves.
The AI orchestration platform
Veritone (VERI 9.64%) runs aiWARE, a platform that can plug into and coordinate many AI models at once for media and enterprise clients. The company also offers tools to manage and monetize media rights, including its Digital Media Hub storefront for licensing video, audio, and images.
Veritone's advertising arm works with brands and creators using aiWARE to plan and optimize campaigns. If Veritone can steady growth and turn more of this platform activity into recurring revenue, the upside could be meaningful as customers use aiWARE for more jobs and content monetization.
The customer service modernizer
eGain (EGAN 10.12%) provides AI-powered customer service and knowledge management software. Its Knowledge Hub is the core, and add-ons like AssistGPT and AI Agent bring generative AI into answers, guidance, and self-service -- creating clear upsell paths to increase spend from existing customers. If adoption of these GenAI features continues, eGain can lift average revenue per customer and recurring revenue from a modest base.
The digital events innovator
ON24 (ONTF 3.00%) pairs AI-assisted digital events with marketing workflow automation on its Intelligent Engagement Platform. The company's tools repurpose event content with AI, personalize experiences, capture first-party engagement data, and feed it into sales and marketing systems to drive pipeline and lead quality.
The video platform rebuilder
Kaltura (KLTR 1.34%) runs an enterprise video platform with AI search, personalization, and analytics. Its business and education customers provide steady demand, and new AI features support higher pricing and larger accounts. With a largely fixed cost base, even small price-mix gains can expand margins meaningfully from today's levels.
The incident response accelerator
PagerDuty (PD -0.25%) delivers AIOps -- AI-assisted operations -- for incident response and automation. If its tools keep reducing alert "noise" and trigger more automated fixes, customers are more likely to stay and spend more. That could lift net expansion rates and support a higher valuation multiple closer to other enterprise software peers.
The unified customer experience platform
Sprinklr (CXM 0.94%) operates an AI-driven customer-experience platform that encompasses both contact centers and social media management. Its generative-AI copilots and automated care tools help agents work faster and handle more cases, which can widen margins and make the platform stickier versus single-purpose competitors in a crowded market.
The risk-reward setup
Not all of these 10 stocks will succeed. Rekor and Veritone carry real execution risk, Cerence is tied to an auto cycle that must improve, and BigBear relies heavily on government contracts.
However, spreading capital across several AI infrastructure plays can capture upside without paying megacap premiums. While Wall Street chases the obvious names, these companies are quietly embedding AI where it actually makes money.
