We're in the middle of an artificial intelligence (AI) boom, and companies are spending billions of dollars on language models, agentic AI, hardware, networking solutions, graphics processing units (GPUs), power semiconductors. If it's AI, companies are throwing money at it.
But many of us retail investors seem to forget that the AI boom is just a handful of years old, and adoption is still well underway. So one has to ask: What comes next after all that infrastructure is in place?
Well, the easy answer is AI training. Large language models (LLMs) and other AI models need metric tons of data to improve and work as intended.
Image source: Getty Images.
Enter Innodata (INOD 4.25%), a global company that specializes in preparing, organizing, managing, and delivering information in digital format. The company has been in business for over 35 years, though back in its early days, it focused more on content and data processing. The recent AI boom has highlighted its most significant selling point: data engineering for AI training.
So let's talk about why I think Innodata has the makings of the next AI winner, starting with its stock price.
How has Innodata stock performed?
NASDAQ: INOD
Key Data Points
Innodata's stock is currently trading around $57, down from an all-time high of around $94 back on Oct. 8. So, we already see some selling pressure there.
If we look back at its history, the stock traded at just $2.78 five years ago, marking a five-year return of just shy of 1,000%. It's fair to say that the stock has seen some attention in the AI boom but not as much as other companies.
Do the numbers back up the growth?
In its third-quarter 2025 financials, Innodata reported that revenue grew 20% year over year.
However, over the likes of Soundhound, BigBear AI, or C3 AI, I think the company's most significant advantage is that it's already profitable.
Innodata's reported net income reached $8.3 million in Q3, though it was down significantly from last year's $17.4 million. That said, more than half of that amount is related to net operating loss carry over (NOLCO). This means a large portion of the reported income in Q3 of 2024 reflects tax savings rather than cash earnings.
Cash and cash equivalents totaled $74 million for the quarter, more than enough to cover the $44 million in current liabilities reported in their filing. Long-term debt is also at a manageable level relative to its available assets. All in all, it looks like the company has a clean balance sheet.
On a longer time frame, Innodata's five-year revenue growth is up 205%, while its bottom line has increased by a whopping 1,300% over the same period. So, I'd say there are solid fundamentals behind the stock price.
Mass adoption = mass revenue streams
Now, let's talk about the company's strongest tailwind: the mass adoption of artificial intelligence.
As more companies, universities, and governments adopt generative AI into their business processes, the need for data preparation, annotation, model training, domain-specific tuning, and multilingual support will accelerate.
Innodata, with a long history in data preparation, has the potential to ride this mass adoption wave all the way up. In fact, we're already seeing it right now, with the stock price shooting up right as the AI boom started. It's even evident in the recent sell-off, which occurred at the same time many investors rotated away from AI-centric companies.
Is now a good time to buy Innodata?
Wall Street rates Innodata stock a "strong buy" with a near-perfect 4.80 average score, a sentiment that has been increasing over the last three months. The high target price of $110 suggests there's as much as 91% upside in the stock over the next 12 months. And I agree, as I see the company's foundation is set, it's profitable, and has a product that customers are demanding more of.
