The post-election market shift has created compelling opportunities in small-cap technology stocks. The Russell 2000 index has gained 7.8% since the election, compared with just 4.4% for the S&P 500, indicating renewed investor interest in smaller companies after years of large-cap dominance.
This rotation toward small-caps comes at an opportune time for innovative technology companies overlooked during the artificial intelligence (AI) boom. While megacap tech stocks trade at premium valuations, many promising small-caps offer attractive entry points after being pressured by high interest rates and competitive pressures over the past few years.
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Let's examine three innovative companies positioned to capitalize on this shifting market dynamic.
Quantum computing pioneer
Rigetti Computing (RGTI 10.62%) is executing an ambitious quantum computing roadmap that could transform the industry. According to the company's Nov. 12 earnings release, Rigetti plans to deploy a groundbreaking 36-qubit system by mid-2025 using four 9-qubit chips tiled together, followed by a 100-plus-qubit system later that year.
The company's superconducting qubit technology offers crucial advantages over competing approaches. Rigetti's system achieves gate speeds of 60 to 80 nanoseconds-four orders of magnitude faster than ion traps and pure atoms. This speed advantage is critical for hybrid computing applications with current CPUs and GPUs.
While current revenue was modest at $2.4 million in Q3 2024, Rigetti's $92.6 million cash position provides a decent runway to execute its development plans. The stock has gained 209% from Jan. 1 through Nov. 30, 2024, yet remains significantly undervalued relative to the quantum computing market opportunity, which McKinsey projects could reach $45 billion to $131 billion by 2040.
AI infrastructure innovator
Applied Digital Corporation (APLD -8.80%) is rapidly transforming from a crypto infrastructure provider into a leading AI computing platform. The company's fiscal Q1 2025 results released Oct. 9 show revenue surging 67% year over year to $60.7 million, driven by explosive growth in cloud services for AI applications.
The company recently secured a $160 million strategic investment from Nvidia and Related Companies, providing both capital and validation of its technology approach. Applied Digital is also finalizing a lease agreement with a major U.S. hyperscaler for its new 100-megawatt facility specially designed for AI applications, with plans to expand total capacity to 400 megawatts.
The stock has gained 49.8% from Jan. 1 through Nov. 30, 2024, but the company's rapid business transformation suggests substantial room for growth. Applied Digital's cloud services segment contributed $25.9 million in revenue for fiscal Q1 2025, highlighting the company's successful expansion beyond crypto infrastructure.
With $86.6 million in cash and strategic backing from Nvidia, the company is well positioned to scale its AI infrastructure. The planned expansion to 400 megawatts of capacity and growing enterprise demand for high-performance computing create a clear path to sustained revenue growth.
Semiconductor transformation
Wolfspeed (WOLF -7.01%) presents a compelling turnaround opportunity in silicon carbide semiconductors. While down 77.8% from Jan. 1 through Nov. 30, 2024, recent developments suggest the company is taking decisive action to improve its position.
According to Wolfspeed's Nov. 6 earnings release, the company is streamlining operations to become the first pure-play 200-millimeter silicon carbide manufacturer. This transformation is expected to yield $200 million in annual cash savings. More significantly, Wolfspeed secured preliminary approval for $750 million in CHIPS Act funding plus an additional $750 million from lenders, providing crucial capital for U.S. manufacturing expansion.
Recent insider buying adds confidence to the turnaround story. Securities and Exchange Commission filings show director Glenda Dorchak purchased shares at an average price of $8.33 on Nov. 22, following multiple board member purchases. With the stock near multiyear lows and $2.5 billion in newly accessible capital, Wolfspeed offers an attractive entry point for investors willing to bet on silicon carbide's growing role in electric vehicles and industrial applications.
Time to act
Current market dynamics create a unique opportunity for these small-cap technology innovators. Each company combines transformative technology with specific catalysts that could drive significant value creation. While not without risk, these stocks offer compelling exposure to quantum computing, AI infrastructure, and next-generation semiconductors at attractive valuations.
The post-election rotation toward small-caps, combined with company-specific developments, suggests now is an opportune time for growth investors to consider these emerging technology leaders. With strong insider support and improving business fundamentals, these speculative growth stocks warrant serious consideration for risk-tolerant investors seeking outsize returns.
