Artificial intelligence (AI) is driving growing demand for two incredibly important assets: data center capacity and access to quality data to train the AI. Innodata (INOD 3.87%) is a small company addressing the need for the latter. Strong growth for its services has sent the stock soaring almost 89% this year, but it's just getting started.
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Strong momentum heading into 2026
Some companies spend years investing in a certain technology before suddenly experiencing accelerating growth, and that is what is happening to Innodata right now. This company has been around for over 35 years and is currently working with several tech giants, including Alphabet's Google and Microsoft, to prepare its data for AI training.
The stock's performance this year is supported by robust growth. Revenue grew 79% year over year in the second quarter, and analysts are projecting 45% growth for the full year, according to data available on Yahoo! Finance.
NASDAQ: INOD
Key Data Points
Management expects to realize $10 million from one customer in the second half of 2025, representing a significant step up from the $200,000 this customer spent over the last year. This is consistent with other announcements of big tech plowing increasing amounts of capital into AI infrastructure, showing that Innodata is right in the thick of the AI boom.
The stock looks expensive, trading at 83 times this year's earnings, but this is supported by strong earnings growth expectations. When looking ahead to next year's consensus earnings estimate, the forward earnings multiple drops to 62. Innodata could be a sleeper stock to profit from long-term AI spending by the big tech players.
