Investing in AI: Why Innodata Could Be the Next Big Success

Innodata (INOD) is a small-cap company with a market capitalization of $1.2 billion. In its latest investor presentation, the company stated that it is positioned as a “winning player” in the race for Artificial Intelligence (AI) and Generative AI (Gen AI).

The company transforms large volumes of raw data into formats that help AI models recognize patterns, organize information, and make more accurate predictions and interpretations. Additionally, Innodata assists companies in building customized platforms for analyzing and managing their proprietary data.

In its latest presentation, Innodata also announced that it has secured contracts with five out of the seven tech giants known as the “Magnificent Seven” for services related to large language models (LLM). However, the specific names of these companies were not disclosed.

Innodata is set to announce its financial results on February 20. According to FactSet forecasts, the company is expected to report revenue of $53 million and earnings per share (EPS) of $0.21. If achieved, this would represent a 103% increase in revenue and a 328% growth in profit compared to the same quarter last year.

The company is experiencing exponential growth, and we are seriously considering adding it to our portfolio before the Q4 earnings report on February 20. To initiate a position, a match between technical and fundamental factors is essential.

Two of the last three earnings reports triggered significant trading volume surges, as the company continues to move towards profitability. Analysts have revised their EPS expectations three times in the past three months. Current projections suggest an EPS of $0.80 for 2024 and $0.78 for 2025. Could there be further upward revisions in earnings expectations soon?

Looking at the daily chart, we can see that the downward resistance from December 2024 has been broken, just ahead of the upcoming earnings report.