Search

2 Hidden Gem AI Stocks Poised for Growth by May 2025

Putting money into smaller companies operating within fast-growing sectors has historically been a winning approach for achieving substantial returns over the long term. This piece highlights two Canadian artificial intelligence firms that you might want to keep an eye on at present.

Let’s see why.

Is purchasing shares of this AI company advisable at present?

Valued at a

market cap

of $141 million,

Intermap Technologies

(

TSX:IMP

) is a geospatial intelligence firm offering high-accuracy 3D topographic information, images, and analytical tools.

Intermap provides digital terrain models, radar images, and bespoke cartography via software interfaces and Data-as-a-Service offerings such as InsitePro and NEXTView. Their geographic information services cater to various sectors, encompassing hazard evaluation, infrastructure development, clean power initiatives, and transit planning.

Experts anticipate Intermap’s revenue will rise from $17.64 million in 2024 to $55.5 million by 2026. Despite ending 2024 with a free cash outflow of $3.81 million, forecasts suggest this figure should improve significantly to reach an inflow of $12 million in 2026, reflecting a robust margin close to 22%. Should the

TSX stock

Is valued at 25 times future free cash flow, it should nearly double within the coming year.

In Q1 of 2025, Intermap Technologies saw their revenue increase by 153%, reaching $4.3 million compared to $1.7 million during the same time in the previous year. This geospatial intelligence firm reported a 28% pro forma adjusted EBITDA margin as they transitioned into profitability, posting a pro forma net income of $833,000—marking an improvement from a net loss of $839,000 recorded previously.

Across all divisions, Intermap experienced growth, marked notably by a dramatic surge of 402%, bringing Acquisition Services revenues up to $2.4 million, largely due to governmental agreements, such as those with Indonesia. Additionally, value-added data sales escalated by 96% to reach $510,000, alongside a robust increase of 43% in software and solution earnings amounting to $1.3 million, attributed mainly to the burgeoning international insurance sector.

Intermap strengthened its financial position, raising $8.7 million during the quarter and ending with $19.2 million in total assets. The company also registered as a foreign private issuer with the SEC (Securities and Exchange Commission) as it progresses toward a senior U.S. exchange listing.

Is this AI stock priced below its value?

Worth a market capitalization of $102 million,

Xtract One

(

TSX:XTRA

) offers AI-driven threat detection gateways designed to automatically search for hidden weapons and banned objects. Their product lineup encompasses SafeGateway, SmartGateway, and Xtract One Gateway systems, which boost safety checks at arenas, gambling establishments, event spaces, offices, and educational institutions.

Analysts tracking the

TSX tech stock

anticipates its revenues climbing from $16.4 million in the fiscal year 2024 (which concludes in July) to approximately $83 million by the end of fiscal 2029, showcasing an impressive compound annual growth rate exceeding 38%.

Additionally, the firm is expected to generate a free cash flow of $22.1 million in fiscal year 2029, as opposed to an outflow of $4.9 million in 2024. Should the AI equity be valued at 20 times future FCF, it might increase by more than 300% within the coming three-year period.

In the fiscal second quarter of 2025, Xtract One reported book revenues totaling $13.5 million, marking a significant increase of 250% compared to the prior year and surpassing their earlier peak of $9.6 million. This AI-driven firm specializing in weapon recognition systems experienced an uptick in overall booking backlog, climbing to $37 million from $22 million during the corresponding timeframe previously.

The revenue for the quarter amounted to $3.4 million, representing a slight rise from $2.9 million in the previous year. The expansion of top-line metrics was limited due to the scheduling of deployments and a transition towards subscription-based agreements. Despite these challenges, the company managed to improve its gross margin to 70%, an enhancement from 61% recorded earlier. Additionally, they effectively cut down their operational costs.

Healthcare has become a key area for expansion, making up approximately 30% of second-quarter reservations due to hospitals addressing escalating security issues and complying with new laws requiring weapon inspections. Meanwhile, channel partners provided impressive outcomes, contributing to about 50% of installed systems and almost half of the total recognized income over this period.

The recently launched One Gateway product has seen substantial adoption within educational sectors and has also created openings for use in manufacturing and distribution centers, which collectively represent an $8 billion market niche.

The management anticipates faster expansion during the latter part of fiscal year 2025, pointing to a promising pipeline valued at $100 million, including $40 million from advanced stages, which sets up Xtract One for sustained advancement towards achieving profitability.

The post

2 Leading AI Stocks to Watch in May 2025

appeared first on

The Motley Fool Canada

.

More reading

• 
  How to Invest CAD 20,000 in Canadian Property for Financial Independence
  
• 
  The Most Intelligent Grocery Investment at This Moment with $3,100
  
• 
  The Most Intelligent Mid-Cap Stocks to Purchase With $2,800 at This Moment
  
• 
  What Will Be the Future Price of Thomson Reuters Stock in 5 Years?
  
• 
  Where to Put $11,200 in the TSX Market Currently
  

Fool contributor

Aditya Raghunath

has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a

disclosure policy

.