Best AI Stocks Under $20 to Watch in 2025
Every time you see a headline about AI, it seems to be about a stock that costs hundreds, if not thousands, of dollars per share. It’s easy to feel like you’ve missed the boat. But what if getting started didn’t require a small fortune?
Think of the current AI boom like a historic gold rush. While news focuses on the famous miners striking gold, many fortunes were quietly built by those selling the picks, shovels, and supplies. The same logic applies to investing in artificial intelligence; for every company building a famous AI, others provide the essential tools that make it all work. Many of these crucial players are surprisingly affordable.
The AI world has its own version of miners and suppliers. The ecosystem can be simplified into three buckets: the “Brains” (software and models), the “Muscle” (powerful computer chips and hardware), and the “Fuel” (the massive amounts of data needed to train AI). While the biggest names are often the “Brains,” they can’t function without the other two.
This is where the opportunity lies. Many of the crucial “Muscle” and “Fuel” providers are smaller companies trading at a fraction of the price of the giants. They provide the essential infrastructure that the entire AI boom is built upon. By focusing on these suppliers, you aren’t betting on a single outcome—you’re investing in the trend itself. This guide offers a starting watchlist of affordable AI stocks to begin your own research.
Palantir (PLTR): The Data-Wrangling Powerhouse
One of the most talked-about names in the AI “fuel” category is Palantir (PLTR). Think of a giant organization whose critical information is scattered across countless different systems and spreadsheets. Palantir’s software acts like a master organizer, creating a single, unified platform where all that chaotic data can be seen and understood, helping leaders connect the dots in ways they couldn’t before.
This service is vital for the AI revolution. After all, artificial intelligence is only as smart as the data it learns from. Feeding an AI model messy, incomplete information is a recipe for disaster. Palantir’s platform essentially cleans and prepares that data, turning it into high-grade fuel for AI applications. This foundational role is what positions it as one of the more interesting high-growth potential AI stocks below $20.
The primary opportunity for Palantir—and its biggest risk—lies in its customer base. For years, the company almost exclusively served large government contracts. Now, it’s aggressively pushing its platform to the commercial sector. If it can successfully convince regular businesses that its tools are indispensable, the potential for growth is enormous. However, its future is heavily dependent on succeeding in this highly competitive corporate market.
As one of the more prominent AI software stocks with low share price, Palantir represents a bet on the importance of data infrastructure itself. While Palantir works on organizing the vast, silent world of data, our next company is focused on the part of AI you can actually talk to.
SoundHound AI (SOUN): The Voice Behind Your Drive-Thru and Car
While Palantir organizes data behind the curtain, SoundHound AI (SOUN) puts a voice front and center. If you’ve ever spoken to an automated system to order food at a drive-thru or asked your car’s infotainment system to find a new route, there’s a chance you were interacting with SoundHound’s technology. The company specializes in creating advanced, conversational voice assistants that go beyond simple commands.
Instead of trying to compete with Amazon’s Alexa or Google Assistant in every living room, SoundHound carves out a niche by providing its voice AI to businesses. Major car brands and restaurant chains want sophisticated voice features, but they don’t want to build an entire AI division from scratch. SoundHound offers them a ready-made solution, making it a key player for companies looking to integrate voice technology quickly.
This focus makes it one of the more fascinating emerging artificial intelligence companies for 2025. It’s a classic challenger story, pitting its specialized expertise against the massive, general-purpose platforms of Big Tech. The risk is clear—it operates in a highly competitive space. The potential, however, is that it becomes the indispensable voice partner for the automotive and hospitality industries. Ultimately, an investment in this small-cap AI stock is a bet that a nimble specialist can thrive by solving very specific problems better than anyone else.
Palantir vs. SoundHound: Which Type of AI Bet Fits Your Style?
These two fascinating AI companies, both trading under $20, couldn’t be more different. Comparing Palantir and SoundHound shows that “AI stock” isn’t just one category and helps clarify which type of investment fits your personal style. The contrast reveals two distinct paths for building a portfolio of low-cost AI stocks:
- Business Model: Palantir offers a broad platform—an entire operating system for data. Think of it like selling a professional toolkit. SoundHound offers a focused product—a specialized power tool for voice communication.
- Customer Base: Palantir targets massive organizations like governments and global corporations. SoundHound focuses on specific industries, like automotive brands and restaurant chains.
- The Investment Bet: A bet on Palantir is a bet on the foundational “plumbing” of the AI world. A bet on SoundHound is a bet on a specific, popular application that runs on top of that plumbing.
There’s no single right answer; it’s about your own investment philosophy. Do you prefer the company trying to become an indispensable utility, or the specialist aiming to dominate a high-growth niche?
The Big Risk: Are Cheap AI Stocks ‘Cheap for a Reason’?
This brings us to a crucial point: are these stocks a good investment, or are they cheap for a reason? The honest answer is often a bit of both. A lower share price usually signals that a company is smaller, younger, or still working to prove its long-term profitability. This uncertainty is exactly what creates the risk. These stocks can experience dramatic price swings, reacting much more sharply to good or bad news than a massive, established company would.
Investing in them is like backing a talented rookie athlete instead of a proven superstar. The superstar is a reliable performer, but their biggest growth is likely behind them. That rookie, however, has explosive potential. If they become the next big thing, your early belief pays off handsomely. The major drawback is that the path to stardom is fragile, and the risk of them not making it is significantly higher.
The golden rule for investing in smaller, high-growth companies is simple: never put in more money than you are willing to lose. This isn’t about expecting failure, but about respecting the risks involved. If picking individual rookies feels a bit too much like gambling, there’s another way to get in the game.
Don’t Want to Pick a Winner? Buy the Entire AI Team with an ETF
Instead of betting on one rookie, you can bet on the entire team through an Exchange-Traded Fund (ETF). An ETF is a pre-packaged bundle of stocks you can buy in a single transaction, letting you own a small piece of dozens of different AI-related companies at once. It’s an easy alternative to researching countless cheap AI stocks one by one.
By spreading your investment across many companies through diversification, you aren’t putting all your hopes on a single firm’s success. If one stock in the fund struggles, strong performance from others can help balance out the loss. This is a smart strategy for beginners, as it greatly reduces the all-or-nothing risk that comes with trying to pick individual winners.
To explore this, search for “AI ETF” or “robotics ETF” on your investing platform. Before you commit, always look at the fund’s “holdings”—the list of companies it actually owns—to ensure its focus aligns with your goals.
Your Next Steps: From Curious Reader to Empowered Investor
You no longer need to see the AI revolution as a game played only by those who can afford thousand-dollar stocks. You now have the framework to look past the headlines and identify the essential “picks and shovels” companies building the foundation of our AI-powered future.
Your journey starts not with buying, but with watching. Here’s a simple, three-step plan to begin:
- Create a free ‘watchlist’ on a site like Yahoo Finance to track the companies discussed.
- Pick one company and find its ‘Investor Relations’ page to see its story in its own words.
- Decide on a small, fixed amount you are comfortable learning with for when you feel ready.
Ultimately, building a portfolio of low-cost AI stocks begins with building your confidence and knowledge. You’re now equipped to explore the future of artificial intelligence investing, one company at a time.