AI small caps are starting to attract more attention as investors look beyond giant platforms and search for earlier stage growth in machine learning, automation, and data intelligence. With central banks juggling inflation, energy prices adjusting to shifting geopolitics, and growth signals mixed across regions, many investors are looking for targeted exposure instead of broad market bets. This AI Small Caps screener focuses on smaller companies that are directly building or enabling AI tools, offering a focused way to research potential long term compounders. In this article, you will see 3 of the most interesting stocks highlighted from that screener.

Pagaya Technologies (PGY)

Overview: Pagaya Technologies uses proprietary AI and large data sets to help banks, fintechs, and other lenders make more accurate credit decisions, turning previously rejected or hard to underwrite borrowers into approved customers that fit each partner’s risk appetite.

Operations: Pagaya generates about US$1.3b in revenue primarily from its Software & Programming activities.

Market Cap: US$1.3b

Pagaya Technologies stands out in AI small caps because its platform is already embedded in real world lending, powering products like Decline Monetization, Dual Look, and FastPass for banks, fintechs, auto finance, and real estate partners. Investors get exposure to a fee based model tied to transaction volumes, supported by a long track record in asset backed securities, including recent AAA rated personal loan and auto deals that signal institutional confidence in its underwriting. At the same time, Pagaya is contending with rising regulatory scrutiny, intense competition from larger players, and concentration risk in key partners. The interaction between these strengths and pressures, particularly in light of its profitability, P/E discount to software peers, and upgraded guidance, is central to how the company may be evaluated.

Pagaya’s mix of real world lending traction, fee based revenue tied to volumes, and a P/E discount to software peers suggests that investors may be overlooking something, and the 4 key rewards and 1 important warning sign could reveal where that story really turns.

SoundHound AI (SOUN)

Overview: SoundHound AI provides independent voice AI and conversational agents that let car makers, restaurants, retailers, and other enterprises build their own branded voice assistants across vehicles, call centers, devices, and apps rather than relying on big tech platforms.

Operations: SoundHound AI generates about US$184m in revenue from Internet Software & Services, with most sales coming from the United States and the remainder from other international markets and segment adjustments.

Market Cap: US$3.2b

SoundHound AI is attracting attention because its agentic AI and voice assistant platform sits at the center of how cars, restaurants, and enterprises want to talk to customers, just as voice interfaces and autonomous AI agents are gaining traction. The planned LivePerson acquisition, recent OASYS launch, and new wins across automotive and quick service restaurants could deepen customer relationships and support recurring revenues, but the company is still loss making, relies on large contracts, and is funding growth with higher cost external capital and potential equity dilution. If you want to understand how those growth ambitions stack up against the ongoing losses, insider selling, and valuation pressure, the fuller analysis of SoundHound AI’s risks and rewards is where the real trade offs become clear.

SoundHound AI’s voice agents sit where cars and restaurants actually meet customers, yet the real tension is how growth ambitions stack up against losses, contract risk, and valuation pressure in the 1 key reward and 3 important warning signs

Penguin Solutions (PENG)

Overview: Penguin Solutions provides high performance computing and AI infrastructure for enterprises, combining hardware, software and services across brands like Penguin Solutions, Stratus, Penguin Edge and SMART Modular to support data centers, edge deployments and complex AI workloads.

Operations: Penguin Solutions generates about US$570.4m of revenue from Integrated Memory, US$538.0m from Advanced Computing and US$239.8m from Optimized LED products and services.

Market Cap: US$3.2b

Penguin Solutions sits at the intersection of AI compute, memory and energy efficient LEDs, with growth tied to rising demand for turnkey infrastructure and recurring software and services such as OriginAI and ClusterWare. At the same time, earnings are still catching up with expectations, the P/E multiple is high, and the business leans on large, lumpy projects, tariff exposed manufacturing and R&D that may not pay off for years. For investors tracking AI small caps, the combination of reaffirmed 2026 guidance, analyst interest after recent forecast upgrades and insider selling, funding risk and share price volatility makes Penguin Solutions a stock where both the upside story and the execution risk matter.

Penguin Solutions sits at the intersection of AI compute, memory and LEDs, but the real story may be how its project driven earnings and high P/E interact with the 2 key rewards and 2 important warning signs

The three AI small caps in this article are just a starting point, and the full AI Small Caps screener surfaces 31 more companies with equally compelling AI driven narratives around machine learning, automation, and data intelligence. Use Simply Wall St to identify, filter, and analyze the exact catalysts, business models, and risk reward profiles that match your own thesis so you can focus on your highest conviction plays.

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Seeking Alternatives Before Momentum Takes Off?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.