The momentum of the artificial intelligence (AI) infrastructure segment is in top gear this year. The AI space remains rock solid supported by an extremely bullish demand scenario. This huge spending on AI infrastructure will dramatically change the world over the next five years.

Here we recommend three small-cap (market capital < $4 billion) stocks with a favorable Zacks Rank to tap potential massive gains in the near term. These stocks are: Innodata Inc. (INOD Quick QuoteINOD - Free Report) , Calix Inc. (CALX Quick QuoteCALX - Free Report) and Five9 Inc. (FIVN Quick QuoteFIVN - Free Report) . Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

Image Source: Zacks Investment Research

Innodata Inc.

Zacks Rank #1 Innodata has established itself as a crucial partner in the AI revolution providing high-quality data needed to train advanced language models. INOD is expected to benefit from the massive demand for supplying state-of-the-art data engineering to large language model building and maintenance over the long term. 

Innodata currently supports five of the seven hyperscalers within the Magnificent 7 domain. Five of these companies raised their 2025 AI-centric capital expenditure on the last-reported earnings conference call. 

The long-term growth of INOD’s business model is set to be backed by big techs, other big enterprises, industry-specific demand, federal agencies, public relations and healthcare. One of the most promising aspects of INOD’s strategy is its successful customer diversification efforts.

INOD has launched a GenAI Test and Evaluation Platform focused on Large Language Model validation and risk benchmarking. The platform, built on NVIDIA Corp.’s (NVDA) NIM microservices, enables testing for hallucination, prompt-level adversaries and reliability scoring. 

INOD is expanding its delivery capabilities to strengthen operational efficiency and maintain a competitive edge in the fast-evolving AI services market. The company continues to focus on building a stronger delivery framework that supports rising project volume and new customer engagements across major technology clients. By scaling its global operations and enhancing technical delivery, INOD intends to manage increasing demand for complex data and AI integration projects.

Innodata has an expected revenue and earnings growth rate of 24.1% and 35.6%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 1.7% over the last 30 days. 

The average short-term price target of brokerage firms represents an increase of 58.7% from the last closing price of $59.07. The brokerage target price is currently in the range of $80-$110. This indicates a maximum upside of 86.2% and no downside.

Calix Inc.

Zacks Rank #1 Calix provides the cloud, software platforms, systems and services required for communications service providers to simplify their business, excite their subscribers and grow their value. CALX operates in the United States and internationally. CALX offers its Cloud platform services through Calix Engagement Cloud, Calix Operations Cloud, and Calix Service Cloud. 

CALX has integrated AI into its cloud platform and products to enhance broadband experience providers' operations, subscriber engagement, and service delivery. CALX offers AI-powered marketing solutions for the health and finance industries, AI-powered chat bots, and AI-driven initiatives like Calix AI Agents.

Calix has an expected revenue and earnings growth rate of 12.4% and 35.3%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 8.3% over the last 60 days. 

The average short-term price target of brokerage firms represents an increase of 45.5% from the last closing price of $54.65. The brokerage target price is currently in the range of $75-$85. This indicates a maximum upside of 55.5% and no downside.

Five9 Inc.

Zacks Rank #2 Contact center software solutions provider Five9 has been benefiting from FIVN’s strong performance, which was driven by a rise in subscription revenues supported by traction in Enterprise AI revenues. FIVN provides intelligent cloud software for contact centers in the United States, India and internationally.

FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions. 

FIVN’s platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows the management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.

FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. Five9 introduced its Intelligent CX Platform powered by Five9 Genius AI on the Google Cloud. FIVN also released new Five9 AI agents tailor-made for Google Cloud.  

Ties with big names like Salesforce Inc. (CRM), Microsoft Corp. (MSFT), ServiceNow Inc. (NOW), Verint Systems Inc. (VRNT) and Alphabet Inc. (GOOGL) helped the company build more tailored AI tools and improve its integration across platforms. This is anticipated to have helped FIVN win new clients and hold on to the existing ones.

Five9 has an expected revenue and earnings growth rate of 9.7% each and 8.3%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 1.3% over the last 30 days.

The average short-term price target of brokerage firms represents an increase of 72.4% from the last closing price of $19.69. The brokerage target price is currently in the range of $22-$59. This indicates a maximum upside of 199.6% and no downside.