The UK and US stock markets have performed well so far in 2026. Growth shares have led the charge, leading some to believe it’s harder to find good under-the-radar picks. Even though the mega-cap tech companies have received a lot of attention, I believe this smaller firm could be one to watch.

Eyes to the US

I’m talking about Innodata (NASDAQ:INOD). Over the past year, the stock is up 145%. Investors are starting to realise it could be a great ‘picks-and-shovels’ play in the AI boom. While some have been obsessing over who will build the best chatbot, Innodata has been supplying the high-quality data needed to train AI models in the first place.

Its core offering revolves around data annotation and the preparation of complex datasets for large language models. In simpler language, Innodata helps AI systems become smarter and safer.

What makes the story more interesting to me is understanding where Innodata sits in the AI ecosystem. It’s not trying to compete directly with tech giants like Microsoft or Meta. Instead, it benefits from all of them spending aggressively on AI development. In fact, it works with several major tech firms already and is deeply embedded in the AI training pipeline.

Share price movements

The sharp move higher in the share price in recent months has been backed by trading updates. The business delivered 48% full-year revenue growth in 2025, with sales hitting $251.7m. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) climbed 68%, while management guided for at least 35% of further growth in 2026. More recently, Q1 2026 revenue jumped 54% year on year to over $90m, beating expectations.

The offering is clearly in demand right now, and I think it can continue in the future. After all, AI models are becoming more complex, not less. That plays directly into Innodata’s strengths. The company has been expanding into different areas, such as sovereign AI programmes and even physical AI applications tied to robotics. This means that wherever the wild world of AI takes us in the coming years, Innodata likely has a part to play behind the scenes.

I believe that the stock could double in the next year, which isn’t unrealistic if it keeps up the pace of growth and new projects that it has in the past year. Further, even after doubling in value over the past year, the market cap is still relatively small at $3bn. It could therefore double again without it being seen as a large-cap company.

Noting the risks

Of course, there are risks involved. Customer concentration is a potential issue. Regulatory filings show a significant proportion of revenue still comes from a relatively small number of large customers. If one major AI client reduced spending, it could spell problems.

The company is also facing strong competition as other AI data specialists vie for a slice of the same opportunity. Yet even with these concerns, I think the stock could do very well in the coming year and am seriously thinking about buying it.

Jon Smith has no positions in the shares mentioned.