An AI-driven surge could transform this software company
- Consider Innodata before more investors realize its growth potential.
Will Healy (Innodata): Innodata (INOD 12.20%) is not a household name despite trading on the markets since 1993. Nonetheless, it may be one of the companies set to climb out of obscurity thanks to AI.
Innodata is a draw because its low-code software platform can help customers utilize traditional and generative AI to automate processes, perform manual tasks, and train models. This frees workers to spend time on other duties and endeavors.
Despite competition from the likes of Accenture (ACN 1.44%) and Globant (GLOB 2.91%), its prowess in generative AI has helped it put master service agreements in place with five of the Magnificent 7 companies. This is a notable feat for a company with a market cap barely above $450 million.
Still, its improved financials have caught the eyes of more investors. In the first half of 2024, revenue of $59 million rose 54% compared with the same period in 2023. Also, Innodata earned $975,000 in the first two quarters of 2024, a dramatic improvement from a $2.9 million loss in the first half of 2023.
Additionally, investors will like its stock price growth, which is up by more than 90% this year and more than 1,000% over the last five years!
Its move to profitability is too recent to give investors a meaningful P/E ratio. Still, the forward P/E ratio is only 34, a low level considering its revenue growth.
Admittedly, small-cap stocks come with risks, and indeed, Innodata stock could turn negative if the generative AI market struggles or its mega-tech client base turn to competitors. However, if the stock stays on its current trajectory, a significant investment could bring life-changing gains if it stays on its current path.
