10 AI Stocks Under $20 to Buy Now
You see AI stocks like NVIDIA soaring and might feel like you’ve missed the boat. It’s a common feeling when a technology trend seems to explode overnight, but the story of AI is far from over.
It’s possible to find innovative companies tied to this revolution for less than the cost of a dinner out. We’ve identified 10 such AI stocks under $20, but first, we must cover the single most important lesson about buying low-priced shares to avoid a common and costly mistake.
The #1 Mistake New Investors Make: Why a $10 Stock Isn’t Necessarily a ‘Bargain’
The biggest trap in buying low-priced stocks is thinking a $10 stock is “cheaper” than a $100 stock, just like a $10 t-shirt is cheaper than a $100 jacket. With stocks, this assumption can be a costly mistake. The share price alone tells you almost nothing about the company’s true size or value.
Think of a company as a whole pizza. The share price is just the price of a single slice. A huge pizza cut into 100 tiny slices might sell for $5 a slice, while a small personal pizza cut into just four slices might sell for $25 a slice. Even though the $5 slice is cheaper, the whole pizza actually costs far more ($500 vs. $100).
This “whole pizza” cost is what investors call market capitalization, or “market cap.” It’s the true price tag of a company, calculated by multiplying the share price by the total number of shares that exist. A company with a $5 stock price but one billion shares in circulation is actually a $5 billion company—far from a small, undiscovered startup. Conversely, a company with a $50 stock and only 10 million shares is a $500 million company.
This distinction is the tool that helps you see past the sticker price to evaluate a company’s real scale. As you explore cheap AI stocks, keep the whole pizza in mind, not just the price of one slice. This single shift in perspective will make you a much smarter investor.
Risk vs. Reward: What ‘Under $20’ Really Means for Your Money
So, what does a low share price often signal? In many cases, it points to higher risk. Think of a massive, established company like a giant cruise ship—it moves slowly and steadily. Many smaller companies, especially those under $20, are more like speedboats. They can gain speed incredibly fast, but they can also get tossed around by the waves. This potential for sharp, rapid price swings is called volatility.
This high volatility is why these stocks are often considered speculative investments. A speculative investment isn’t a bet on a company that’s already a proven giant; it’s a bet on what a company could become. You’re investing in the potential for a major breakthrough or rapid growth, not in a long history of steady profits. The exciting part is that if the bet pays off, the returns can be huge. The crucial flip side is that many of these bets don’t pay off, and you could lose your entire investment.
Are you comfortable with the “stormy weather” of a speculative stock, or do you prefer the calmer waters of more established companies? Only you can answer that. If you’ve decided this level of risk is right for you, the next step is to understand the different kinds of businesses in the AI world, starting with the “pick-and-shovel” players.
3 ‘Pick-and-Shovel’ AI Stocks Under $20 Powering the Revolution
During the gold rushes of the 1800s, some of the wealthiest people weren’t the ones who struck gold. They were the ones selling picks, shovels, and blue jeans to all the hopeful miners. This same idea applies to investing in AI today. Instead of trying to pick the one AI company that will become the next Google, you can invest in the companies that provide the essential “tools” every other AI business needs to function. This is often seen as a less risky way to benefit from the overall trend.
These “toolmaker” companies are critical to the AI ecosystem. They don’t build the final, flashy app you use on your phone. Instead, they provide the data processing, voice recognition engines, or specialized hardware that thousands of other companies rely on. By investing in them, you’re betting on the growth of the entire AI sector, not just the success of a single product.
Here are three examples of affordable AI stocks that fit this “picks and shovels” theme, giving you a starting point for your own research:
- SoundHound AI (SOUN): Provides advanced voice and audio recognition technology. Think of them as selling the “ears” that allow cars, TVs, and drive-thrus to understand what you’re saying.
- BigBear.ai (BBAI): Offers AI-powered data analysis and decision-making tools, primarily for government and defense clients. They sell the “digital detective” that can find patterns in massive amounts of information.
- Lantronix (LTRX): Creates the hardware and software that connects devices to the internet and allows them to run AI tasks. They provide the “nervous system” for smart gadgets and industrial equipment.
While these companies provide crucial infrastructure, they still carry risks. They face heavy competition and often operate in a fast-changing market. Next, we’ll look at a different type of AI company: those that use these tools to solve specific, real-world problems.
4 Application-Focused AI Stocks Under $20 Solving Real-World Problems
While the “pick-and-shovel” companies provide the raw power for AI, another exciting group of businesses uses that power to tackle specific, everyday challenges. Think of these as the expert carpenters who use the tools to build something useful, like a sturdy chair or a protective roof. Investing in these companies means you’re betting on their ability to solve a particular problem better than anyone else.
The appeal of these application-focused companies is that their value is often easier to understand. They aren’t selling abstract technology; they are selling a direct solution. This could be anything from making roads safer to helping students learn more effectively. When you can clearly see the problem a company is solving, you have a solid starting point for judging its long-term potential.
From public safety to personalized medicine, these businesses are applying AI in tangible ways. Here are four examples of companies using AI to create solutions, offering another angle for your research into the world of affordable AI stocks:
- Rekor Systems (REKR): Uses AI to analyze traffic data from cameras to improve road safety and manage traffic flow for government agencies.
- Veritone (VERI): Offers an AI platform that helps media companies and law enforcement quickly search and analyze huge amounts of audio and video data.
- Nerdy (NRDY): Applies AI to its online learning platform to match students with the right tutors and create personalized lesson plans.
- Lantern Pharma (LTRN): Uses AI to dramatically speed up the process of discovering and developing new cancer treatments, a high-risk but high-impact field.
These companies succeed by proving their solution is the best fit for a customer’s specific needs. However, that also means they face direct competition. Our final category includes highly specialized companies aiming for explosive growth.
3 Specialized and High-Growth AI Stocks Trading Under $20
Finally, we arrive at the specialists. These companies target very specific, or “niche,” markets. Instead of trying to be a general tool for everyone, they aim to be the absolute best solution for a handful of powerful customers, like government agencies or entire industries. The potential reward is clear: if they become the go-to provider in their chosen field, they can establish a dominant position that’s difficult for competitors to challenge.
However, this laser focus introduces a unique risk: customer concentration. Imagine a small bakery that sells 90% of its bread to a single large hotel. If that hotel decides to switch suppliers, the bakery is suddenly in deep trouble. Many specialized companies face this same risk, relying on just a few major contracts for most of their revenue. Losing even one big client can have an outsized impact on their business.
With that trade-off in mind, here are three companies that exemplify this specialized, high-growth strategy. Both C3.ai stock and Palantir stock are well-known for their work with a small number of very large clients.
- C3.ai (AI): Provides a platform for huge industrial companies (like energy and utilities) to build, deploy, and manage their own enterprise-scale AI applications.
- Palantir Technologies (PLTR): Famous for its data-analysis software used by government defense and intelligence agencies, though it’s expanding into the commercial sector.
- SoundThinking (SSTI): Offers a gunshot detection system to law enforcement agencies, a highly specialized tool for public safety.
These kinds of specialized plays can be exciting, but they often come with higher volatility. They are better viewed as smaller, speculative parts of a larger strategy for long-term AI investments. Building a balanced approach requires portfolio diversification.
Your Next Steps: How to Research These Stocks and Build a Smart Plan
This list provides ten starting points for your own investigation. The real value lies in learning to look past a cheap price tag and understanding that a company’s share price is different from its true value.
Use this knowledge to turn a list of recommendations into a repeatable research process. Here is a simple checklist for how to research stocks on your own:
- Check the Company’s Real Size: Look up the “Market Cap” on a free site like Google Finance.
- Read Their Story: Visit the company’s website and find their “About Us” or “Investor Relations” page to learn what they do in their own words.
- Scan Recent Headlines: Do a quick news search for the company’s name to see recent developments.
After your homework, remember the most important rule of investing: don’t put all your eggs in one basket. Spreading your investments across several companies—a strategy called portfolio diversification—is essential for managing risk, especially with younger companies in a fast-moving field like AI.
Keep learning, start small, and build the confidence that comes from making your own informed decisions.