As a leader in the artificial intelligence gold rush, Nvidia boasts a bright future. However, analysts point out that another often-overlooked AI stock could deliver even greater gains than Nvidia. This company is data analytics firm Innodata (INOD.US), which helps major tech companies prepare data for AI projects. Over the past five years, Innodata has outperformed Nvidia, surging nearly 1,400%. Analysts project its stock could rise approximately 68% in the next 12 months, with Wall Street's average price target set at $93.75.

Founded in 1988 and publicly listed in 1993, Innodata initially flew under the radar. Back then, it appeared to be just another small, slow-growing data services provider. Its offerings—content digitization, digital publishing, and data enhancement services—catered to niche clients and were labor-intensive, making scalability difficult. From 1994 to 2019, its revenue grew at a mere 6% annual compound rate. By the end of 2019, its stock price stood at just $1.14 per share, 32% below its split-adjusted IPO price of $1.67.

But in 2018, Innodata launched a series of task-specific microservices capable of efficiently labeling vast amounts of high-quality data for AI applications. As the AI boom took off, demand for these services exploded. Today, at least five of the "Magnificent Seven" tech giants use Innodata’s services to clean and prepare their AI-ready data.

When large tech companies initiate new AI projects in-house, they typically spend 80% of their time preparing raw data and only 20% training the actual algorithms. This costly and inefficient process makes outsourcing the work to Innodata a far smarter choice.

Innodata’s rapid growth is evident in its financials. From 2019 to 2024, its revenue grew at a 25% compound annual rate, climbing from $56 million to $171 million. Adjusted EBITDA soared from $3 million in 2019 to $35 million in 2024. This acceleration was fueled by its newly established Innodata Labs R&D division, which focuses on integrating its capabilities into scalable AI data preparation services. Its prior experience in filtering high-quality data also supported this swift transformation.

Innodata expects its 2025 revenue to grow at least 45%, with "transformational growth" anticipated in 2026, driven by the expansion of the generative AI market and the addition of more major tech clients. Analysts forecast its 2025 revenue will rise 46% to $249 million, followed by a 25% increase to $311 million in 2026.

As Innodata scales its operations, its costs should decline, and its pricing power improve. Consequently, its adjusted EBITDA is projected to grow 53% to $53 million in 2025 and another 26% to $67 million in 2026.

With an enterprise value of $1.8 billion—trading at 33 times this year’s adjusted EBITDA—Innodata isn’t particularly cheap. However, its robust growth rate may justify a higher valuation. If Innodata meets analysts’ expectations and maintains the same EV/EBITDA multiple, its enterprise value could rise 22% to $2.2 billion over the next 12 months. Under a more optimistic scenario—trading at 45 times adjusted EBITDA—its enterprise value could surge 67% to $3 billion, nearly matching the stock’s 12-month average price target.