Over the past few decades, the market's top tech stocks have turned a modest $1,000 investment into hundreds of thousands of dollars. But to replicate those multibagger gains over the next decade, investors should focus on the less valuable stocks -- which still have significant upside potential -- rather than multi-trillion-dollar tech titans like Nvidia (NVDA 1.53%).
One of those stocks is Innodata (INOD 4.84%), which has surged more than 720% over the past five years but is still valued at about $1.5 billion. Let's see why it's a smart buy today.
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Innodata's data annotation skills are finally paying off
When Innodata went public in 1993, it didn't attract much attention because it was a slow-growth provider of content digitization, digital publishing, and data enrichment services. But in 2018, it launched a suite of task-specific microservices that efficiently annotated and prepared large amounts of high-quality data for AI applications.
There was a fertile market for these niche services, since tech companies often spent about 80% of their time annotating and preparing the data for their AI projects. Only the remaining 20% of that time was used to train the actual AI algorithms.
Therefore, it made sense to outsource that prep work to Innodata's platform. Today, at least five of the Magnificent Seven companies already use Innodata's services to clean up their data. That's why its revenue more than quadrupled from $56 million in 2019 to $252 million in 2025. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also turned positive again in 2023, more than tripled in 2024, and rose 68% to $58 million in 2025.
NASDAQ: INOD
Key Data Points
How much bigger could Innodata grow?
From 2025 to 2027, analysts expect Innodata's revenue and adjusted EBITDA to grow at CAGRs of 31% and 19%, respectively. Those are impressive growth rates for a stock that trades at 4 times this year's sales and 24 times its adjusted EBITDA.
At the end of 2025, Innodata had $82 million in cash, cash equivalents, and short-term investments, a positive operating cash flow, and a low debt-to-equity ratio of 0.6. That strong financial foundation gives it plenty of room to expand its AI capabilities. It also makes it a tempting takeover target for a larger AI infrastructure services company.
Innodata must expand its customer base to reduce its dependence on its Magnificent Seven, and it needs to prove that new generative AI services won't render it obsolete. But if it addresses those challenges, it could have plenty of room to expand as the AI boom continues.
