By Dan Victor

Sorting AI winners from AI laggards has been one of the toughest calls for investors in 2026. Innodata is one stock clearly in the winners' column.

Shares of the data engineering company skyrocketed 80% today on record setting quarterly results. The stock is now up 127% since it was featured as a Barron's stock pick last September. We updated this call twice since: on Jan. 23 when it was up 65% and six days later on news of a deal with Palantir Technologies.

Ridgefield Park, N.J.-based Innodata focuses on delivering annotated and curated data required to train and refine advanced AI models. Partnering with the leading hyperscalers and other AI companies has been a boon for the business in recent years, a trend that shows no signs of slowing.

Innodata reported first-quarter revenue of $90.1 million, up 54% year over year and well ahead of the Wall Street consensus estimate of roughly $76.5 million. Earnings per share surged to $0.42, nearly doubling last year's $0.22 and smashing expectations of around $0.08. The company also raised its full-year revenue growth guidance to 40% or more from a prior target of 35% or more.

A major theme in the report was continued customer diversification. This addressed concerns that the business was too concentrated as the largest account represented 58% of revenue in 2025. In the earnings report, Innodata spoke of a significant new engagement with "one of the world's leading Big Tech companies" that is expected to generate approximately $51 million in revenue this year and become its second-largest customer. "The largest account continues to grow in absolute dollars, while the rest of the customer base grows even faster," said CEO Jack Abuhoff. He added that several potentially large programs in the pipeline have not yet been included in its forecasts.

In January, Barron's reported that Innodata was selected by Palantir to provide AI trading services in the emerging field of multimodal data -- work that extends beyond traditional text to include video, imagery, and sensor data with possible applications in defense and robotics. The company is also seeing rising demand for its solutions supporting agentic AI systems.

Ultimately, we remain strongly bullish on Innodata. The stock may not be cheap trading at around 55 times forward earnings, but its valuation is justified given the company's unique profile, category leadership, and accelerating growth. For investors seeking pure-play exposure to the picks-and-shovels of AI breakthroughs, Innodata continues to stand out as a compelling growth story with plenty of fuel left in the tank.

Wedbush Securities analyst Dan Ives has an outperform rating on Innodata. Meanwhile Maxim Group analyst Allen Klee set a Street high price target on the stock at $111, implying 35% upside from the recent price of $82.

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May 09, 2026 02:05 ET (06:05 GMT)

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