AI penny stocks are unlikely to be in most people’s bucket lists in the current environment. Most people are piling into the top few mega-cap stocks or are continuing to hoard cash in anticipation of lower stock prices.

This could be a good opportunity to buy up some promising AI penny stocks if you strongly believe in the AI narrative. Getting in early during a period of bearishness surrounding small-cap growth stocks is a good way to increase your chances of landing multibagger gains down the line.

I would note that all these companies are very small and their stock prices swing rapidly. You’re better off investing in an index fund or bigger growth companies if you don’t want the obvious downside risks here.

Indie Semiconductor (NASDAQ:INDI) makes analog and mixed-signal integrated circuits for the automotive market. It also has software for driver safety and automation. In the past three years, most automotive-related stocks saw a massive decline in their stock prices as demand cooled, especially for electric vehicles. Interest rates have been mainly to blame, and I also think interest rates will be the remedy.

The Federal Reserve held interest rates steady in May, and if tariffs linger around, they could hold up interest higher for the rest of the year. Even in this environment, analysts see the company posting 20.7% revenue growth for all of 2025 and 49% growth next year, along with positive EPS. If we look at next year’s expected earnings, you’re paying just 13.6 times earnings for a semiconductor startup with solid growth.

I believe indie semiconductor would perform much better once interest rates eventually come down from current levels. It is one of the only few pure-play automotive semiconductor manufacturers and also has a $7.1 billion backlog.

The consensus price target of $6.3 implies 170.4% upside potential.

Navitas Semiconductor (NASDAQ:NVTS) is a high-growth power semiconductor company. It specializes in gallium nitride (GaN) and silicon carbide (SiC) tech. It has 100+ GaN power IC patents offering up to 40% higher efficiency than traditional silicon solutions, along with a customer pipeline of $2.4 billion.

It is a very similar play to indie Semiconductor as it also focuses on the EV market, though there is lots of room for growth in the industrial and solar sectors as well. All these sectors are currently seeing a downturn due to tariffs and macro headwinds, but the company expects 2025 to mark a cyclical bottom.

Revenue is expected to decline 23.15% this year but rebound and grow by 50.6% next year to $96.4 million. Navitas targets EBITDA breakeven by 2026, which is possible if the AI rally continues.

A SeekingAlpha analyst has his price target at $70.43 by 2032, which implies 3,650% upside, though buying due to this price target would be on the extreme end of a “speculative” investment. I do think that it could deliver 150-200% upside if the AI rally returns.

Speaking of speculative, Veea (NASDAQ:VEEA) definitely fits the bill. This is an edge computing startup that could have a lot of potential if the cloud computing sector keeps growing. A rising tide there will lift all boats, and they stock could be sitting near the bottom right now.

The stock is at $1.6 as of writing and could move up massively if it lands a big cloud contract, which is likely if the broader industry grows.

It doesn’t have the best profitability metrics as it is a startup, but solid sales growth could be ahead. I only see this is a potential 10-bagger due to the stock market having a lack of American edge computing pure-plays available. Lots of capital is can flow in regardless of whether or not the company lands a big contract if the AI rally continues.

— Omor Ibne Ehsan

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Source: Money Morning