Innodata (INOD) is a small $1.2 billion market cap company that in a recent investor presentation says is … positioned as a “picks and shovels” beneficiary of the AI and Gen AI race. In simple terms, the company transforms large amounts of raw data into formats that help artificial intelligence models recognize patterns and organize the data to make more accurate predictions and interpretations. They also help companies build custom platforms to analyze and manage their own data. Innodata also claims in the most recent investor presentation that it has been contracted by 5 of the 7 “Magnificent Seven” for their large language models (LLM’s) services, though the specific names of those 5 have been withheld. Innodata is set to report earnings on Feb 20, with expected topline revenues of $53 million on 21 cents in bottom-line EPS, according to FactSet. If the company hit those targets that would be 103% and 328% growth respectively from the same quarter last year. This company is growing exponentially and I do not yet own it in our growth portfolio. However, I am strongly considering adding before Feb 20th Q4 earnings. The combination of technicals and fundamentals must align for us to begin building a position. Earnings breakouts Two of the prior 3 earnings reports have produced massive volume breakout reactions as this company climbs further into proftiability. Analysts have upgraded their EPS expectations 3 times in the past 3 months and while only looking for $0.78 EPS for 2025 compared to $0.80 in 2024, I’m wondering if there will be additional earnings upgrades coming in the near future? Moving down to the daily chart, we can see downtrend resistance from Dec 2024 was broken ahead of the next earnings report. I am considering building a half size position ahead of Feb 20 and while the stock is above $37 support. If the earnings report beats and the company provides solid guidance, I’ll look to move on this small AI play. -Todd Gordon, Founder of Inside Edge Capital, LLC DISCLOSURES: (Gordon does not yet own INOD in his wealth management company Inside Edge Capital, LLC. Charts shown are Deepvue.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
This small AI play is headed for an earnings-driven breakout, according to the charts