AI chipmakers are still getting most of the attention, but there are a bunch of small AI stocks that are producing substantial gains while most people focus on big names like Nvidia (NASDAQ:NVDA | NVDA Price Prediction) and Broadcom (NASDAQ:AVGO).
The AI bottleneck isn’t just about chips. There are a bunch of inputs that are just as important as semiconductors, but most investors haven’t noticed. The result is bargain-basement prices on stocks that can realistically 10x from current levels. These three small AI stocks might be this year’s superstars.
IREN (IREN)
IREN (NASDAQ:IREN) creates AI data centers that store chips and have the necessary gigawatts to power those chips. The company announced a 5-year, $9.7 billion deal with Microsoft (NASDAQ:MSFT) in November. The deal covers 200 megawatts. Since IREN has a pipeline of roughly 3,000 megawatts, it will soon have the capacity to support 14 additional deals like the Microsoft one, resulting in substantial annual recurring revenue.
This is a big deal for investors who have heard about IREN for the first time, but investors who have known about the stock for a while are looking for the next catalyst. Competitor Applied Digital (NASDAQ:APLD) provided bullish news by confirming that it signed a deal with another hyperscaler in its Q2 FY26 press release and said that they are in “advanced discussions with another investment-grade hyperscaler across multiple regions.”
It’s safe to bet that Applied Digital isn’t the only one receiving plenty of attention for its data centers, most of which aren’t completed quite yet. Meanwhile, IREN’s Sweetwater 1 project is set to be energized in April 2026. It has the capacity for 1.4 gigawatts. The earlier access to chips and gigawatts can help IREN secure more lucrative deals if it waits a little longer. Investors should expect a big announcement when the company reports Q4 earnings in February.
AXT (AXTI)
AI chips are the most obvious opportunity in AI, and data center stocks like IREN are gaining momentum. However, the materials that go into AI chips and infrastructure builds are very overlooked right now. AXT (NASDAQ:AXTI) shows how much investors can be rewarded if they pay attention to this part of the AI bottleneck.
AXT develops and manufactures indium phosphide. It offers superior electron mobility and efficiency compared to silicon. It’s an important material for semiconductors, and AXT happens to control 40% of the market. China export controls have made it more difficult to access this critical resource, and that has helped AXT command higher prices for indium phosphide.
Demand has also surged as well. The company told investors in its Q3 earnings release that its indium phosphide revenues grew by more than 250% sequentially. Customer orders should continue to flow as AI infrastructure scales. The under-the-radar stock has gained more than 1,000% over the past year and only has a $1 billion market cap.
Silicon Motion Technology (SIMO)
Silicon Motion Technology (NASDAQ:SIMO) is a small AI stock that offers memory solutions for AI infrastructure. Without memory solutions, AI chips would be overwhelmed by the workloads and unable to handle all of the tasks of AI apps like ChatGPT.
Memory solution stocks are gaining more traction, with Micron (NASDAQ:MU) more than tripling over the past year. Silicon Motion Technology is a smaller AI stock with a market cap just shy of $4 billion after doubling over the past year. Revenue has been picking up recently, and as sales accelerate, Silicon Motion Technology stock may be due for additional gains.
The memory storage company delivered a 22% sequential increase in sales during the third quarter. Q4 guidance implies up to 10% sequential revenue growth and up to 39% year-over-year revenue growth. If Silicon Motion Technology fulfills guidance and sets ambitious targets for 2026, more investors will pay attention to the stock.
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