What Are the Best AI Stocks to Buy Now Under $10?
When AI leaders like NVIDIA trade for hundreds of dollars per share, investing in artificial intelligence can feel out of reach. Many investors then search for AI stocks under $10, hoping to find the next big thing for a bargain.
However, this hunt for a “cheap” stock is where many new investors make a costly mistake. A low share price does not equal a good value—a $5 stock can be wildly more “expensive” than a $500 one.
This guide provides a rulebook for finding affordable AI stocks by breaking down the crucial difference between price and value. You’ll learn a framework to spot potential opportunities and avoid common traps, followed by a few examples that fit the criteria.
The “Pizza Rule”: How to Tell if a $5 Stock is Actually a Good Deal
It’s natural to think a $5 stock is a bargain compared to one that costs $200, but a single share’s price tells you almost nothing about the company’s actual size or value. This is the most common trap for new investors, and luckily, it’s easy to avoid. To analyze emerging AI stocks, you must look past the share price and find the company’s total price tag.
To do this, we use a simple concept called market capitalization, or “market cap.” Think of it like a pizza. The share price is just the price of one slice. The market cap is the price of the whole pizza. A tiny, expensive slice from a giant party-sized pizza might cost the same as a huge slice from a small, personal pizza. You can’t judge the size of the whole pizza by the price of one slice alone.
Calculating market cap is simple: it’s the share price multiplied by the total number of shares a company has. This number is listed on any finance website and is a key criterion for selecting AI stocks. It instantly tells you if you’re looking at a massive corporation or one of the smaller, more nimble small-cap artificial intelligence companies.
Understanding a company’s true size is your new superpower. It allows you to compare an apple-to-apples value between a $5 stock and a $500 one. However, companies with a low market cap—the “personal-sized pizzas” of the stock world—often come with their own unique set of challenges.
Why “Under $10” Can Be a Red Flag: The Two Hidden Risks You Must Know
If a low price doesn’t mean a company is a bargain, why are these stocks so cheap? The answer is often volatility. A massive, well-known stock is like a cruise ship—it moves slowly and predictably. An under-$10 stock, however, is often more like a speedboat in choppy water. Its price can soar or sink dramatically on a single piece of news, a rumor, or a change in market sentiment. This high-speed movement can be thrilling, but it can also wipe out your investment just as quickly.
The second major risk is that many cheap AI stocks are purely speculative. Investing in a giant, profitable company is a bet on its continued success. Buying a speculative stock is more like betting on a brilliant idea that has yet to make significant money. You are speculating that its technology will one day be a massive hit. It’s the difference between buying a cash-flowing rental property and buying an empty lot in the desert hoping a city gets built around it.
Ultimately, that sub-$10 price tag is often the market’s way of pricing in these huge uncertainties. It’s not a “sale” sticker; it’s a bright yellow warning label indicating the company’s future is far from guaranteed. To navigate this potential minefield, start by understanding what kind of AI company you’re looking at.
Are You Buying the “Gold” or the “Shovels”? A Simple Way to Categorize AI Stocks
One helpful way to manage risk is to think like a gold rush prospector from the 1800s. While thousands rushed west hoping to strike gold (a high-risk, high-reward bet), the people who made the most reliable money were the ones selling picks, shovels, and supplies to all the prospectors. They won no matter who found the big gold nugget.
This same dynamic is playing out today in artificial intelligence. You can separate most AI stocks into two simple groups:
- The “Gold Miners”: These are companies trying to strike it rich by building a specific, groundbreaking AI product, like a revolutionary app or a new form of generative AI. Their success is tied to their one big idea.
- The “Picks & Shovels”: These companies create the fundamental technology that the “gold miners” need to operate. Think of companies that make specialized computer chips, data analysis platforms, or essential software components.
Investing in a “Gold Miner” is often a speculative bet, which is why many of them trade for under $10. Investing in a “Picks & Shovels” company, on the other hand, can be a way to bet on the entire AI trend itself, which can be a less volatile approach. Our first example is a company that aims to be a crucial “shovel” in the world of voice-powered AI.
AI Stock Idea #1: The Tech Behind Voice-Powered Everything (SoundHound AI, SOUN)
Our first idea is a textbook example of a “picks and shovels” company in the AI software space. SoundHound AI (Ticker: SOUN) creates the underlying artificial intelligence that allows other companies’ products to understand and respond to human speech.
If you’ve ever talked to the infotainment system in a newer car, there’s a good chance you were interacting with technology like SoundHound’s. The company provides the AI “brains” for voice assistants in vehicles, restaurant drive-thrus, and smart devices. It sells this “shovel” to businesses that want to add powerful voice features without building the complex technology themselves.
The appeal here lies in its growing list of partners. Major automakers like Hyundai and Stellantis (the company behind Jeep and Chrysler) use SoundHound’s platform. This is a key signal, as it shows large corporations are betting that this small company’s technology is a powerful alternative to what the tech giants offer. These deals give SoundHound a way to get its technology into millions of hands.
So, why is it an under-$10 stock? The primary risk is fierce competition from giants like Amazon, Google, and Apple, who all have their own voice AI platforms. Furthermore, like many high-growth tech companies, SoundHound is not yet profitable, meaning it spends more money than it makes. This makes it a speculative investment dependent on its ability to keep winning major deals and eventually turn a profit.
AI Stock Idea #2: Using AI to Discover New Medicines (Lantern Pharma, LTRN)
While some companies sell AI tools, our next idea is a “gold miner,” using artificial intelligence to go after one of the biggest prizes of all: discovering new cancer treatments. The risk here is much higher, but the potential reward could be life-changing for both patients and investors.
Think of drug discovery like trying to find one specific key that opens a complex biological lock. Lantern Pharma (Ticker: LTRN) uses its AI platform to analyze massive amounts of data and predict which drug “keys” are most likely to work for specific groups of cancer patients. This approach aims to dramatically speed up a process that traditionally takes billions of dollars and over a decade to complete.
Investing in a biotech firm is a high-stakes bet. Its value is tied almost entirely to its success in clinical trials—the strict, multi-stage testing process required by regulators to prove a drug is safe and effective. A positive trial result can send a stock soaring, while a failure can be devastating. This all-or-nothing uncertainty is the main reason the stock trades for under $10.
Because of this, you don’t watch for quarterly sales reports with a company like Lantern. Instead, the single most important signal is progress in its clinical trials. Investors are betting that Lantern’s AI-driven approach gives it a better-than-average shot at finding a key that finally fits the lock.
AI Stock Idea #3: Predicting the Future for Armies and Businesses (BigBear.ai, BBAI)
Our next company focuses on predicting outcomes. BigBear.ai (Ticker: BBAI) provides AI-powered decision-making tools to huge organizations like the U.S. Army and large corporations. Think of it as a super-powered forecast, not for weather, but for complex logistics, cyber threats, and supply chains. This makes it one of the more serious small-cap artificial intelligence companies to watch.
Unlike a company that sells millions of products, BigBear.ai’s business is built on a handful of large, high-value contracts. Landing a single multi-year deal with a government agency can bring in tens of millions of dollars, providing a steady stream of revenue. This model is common for companies serving the government and industrial sectors.
However, this business model carries a specific risk called revenue concentration. Imagine a coffee shop where 80% of its customers come from one office building next door. If that office closes, the shop is in deep trouble. If BigBear.ai loses one of its major contracts, it can create a massive hole in its revenue, which is a key reason for its low stock price and volatility.
For investors, the most important news is contract announcements, which can be found in a company’s press releases or investor presentations. With these examples in mind, you can create a plan for evaluating any cheap AI stock.
Your 3-Step Checklist Before Buying Any Cheap AI Stock
The world of “cheap” AI stocks can seem like a confusing lottery, but you now have a repeatable framework to see them clearly. The specific stocks discussed were practice; the real prize is the evaluation process itself.
You can apply this thinking to any potential investment with this simple, three-step check:
- Find the Market Cap (The “Pizza Rule”): Are you buying a slice of a big pizza or a small one?
- Define the Business (A “Gold Miner” or a “Shovel Seller”?): Is it a speculative bet or a foundational tool?
- Identify the Big Risk: What’s the real reason this stock is under $10?
This process isn’t about getting rich quick; it’s about making informed decisions. By applying this framework, you have the tools to analyze the long-term potential of AI stocks. Start small, stay curious, and never stop learning.