AI Stocks Under $20 for 2025

You’ve seen the headlines about AI stocks like NVIDIA soaring past $1,000 per share and likely thought, “I’ve missed the boat.” It’s easy to feel priced out. But what if the next wave of AI winners aren’t the giants, but the specialized companies whose shares currently trade for less than the price of a movie ticket?

Think back to the California Gold Rush in the 1800s. While thousands of prospectors hoped to strike it rich, another group of entrepreneurs made fortunes without ever touching a gold pan. They were the ones selling the picks, shovels, and sturdy denim jeans—the essential tools that every miner needed. In investing, this is known as the “picks and shovels” strategy.

Today’s AI boom is a modern-day gold rush, and the same principle holds true. For every major company building a world-changing AI, there are dozens of smaller firms providing the digital “picks and shovels.” These companies supply the critical data, build the unique software, or offer the niche services that make the entire ecosystem run, creating an opportunity for those looking to invest in AI with little money.

This guide is your map to spotting these essential suppliers and understanding their role in the AI landscape. We’ll explore several affordable AI stock picks to get you started, empowering you to look beyond the hype and find the real opportunities powering the future.

Why a $10 Stock Isn’t Always ‘Cheaper’ Than a $1,000 One

When you’re hunting for the next big thing, it’s natural to think a stock priced under $20 is a bargain compared to a giant like NVIDIA trading for hundreds. But a stock’s price tag can be misleading. It tells you the cost of one tiny piece of the company, not how valuable the company is overall. This is one of the most common traps for new investors.

To understand why, let’s think about pizza. Imagine two pizzas. One is a medium pizza cut into four huge slices, with each slice costing $10. The whole pizza is worth $40. The other is a massive party-sized pizza cut into 20 smaller slices, with each slice costing only $5. The slices are cheaper, but the whole pizza is worth $100. Which one is actually more valuable?

This is the key difference between share price vs market cap. A company’s total value—the price of the whole pizza—is called its market capitalization, or “market cap” for short. It’s calculated by multiplying the share price by the total number of shares that exist. It’s the truest measure of a company’s size in the market.

A company’s market cap helps you understand what you’re really buying. A company with a $10 share price might be a tiny, unproven startup (a small pizza), while another could be a massive, established business that simply has a lot of “slices.” This context is crucial because a low share price often comes with its own unique set of risks.

Before You Buy: The 3 Big Risks of Low-Priced AI Stocks

That low price tag on a stock can be exciting, but it often comes with a hidden cost: higher risk. Because these companies are often smaller (as we saw with the market cap pizza analogy), they are more fragile than established giants. While it’s tempting to focus only on the potential for explosive growth, understanding the risks is the first step toward making smarter decisions. It’s crucial to know if you’re buying a hidden gem or just a risky bet.

These smaller companies are like speedboats in the stock market ocean—they can move incredibly fast, but they also get tossed around by even small waves. This is the core challenge with many speculative AI stocks. The main risks usually fall into three buckets:

• 1. High Volatility (Big price swings): A single piece of good or bad news can send the stock soaring or sinking dramatically.

• 2. Unproven Business: Many have a brilliant idea for artificial intelligence but haven’t yet turned it into significant sales or a long list of customers.

• 3. Burning Cash: They are often spending more money than they make as they invest heavily in research and growth, with no guarantee of future profitability.

This doesn’t mean you should run for the hills. It simply means you have to be a detective. Your job is to sift through the hype and figure out which companies have a real, sustainable business. So, how do you tell the difference between a revolutionary idea and a money pit?

How to Spot a Real AI Business: Your 3-Point Checklist

Sorting through emerging AI technology companies doesn’t require a finance degree—it just requires asking a few common-sense questions. A flashy story about changing the world with artificial intelligence is easy to tell, but a real business leaves clues. Instead of getting lost in jargon, your first job is to confirm that there’s a real, understandable company behind the stock ticker. This is the first step in finding undervalued AI companies that others might overlook.

Before you invest, run the company through this simple sanity check. Think of it as your initial 10-second test to separate substance from smoke.

The 10-Second AI Business Test:

1. The Simple Explanation: Can I explain what they actually do to a friend in one sentence?

2. The Customer Test: Can I easily find out who their customers are on their website?

3. The Problem Solver: What real-world problem are they actually fixing with their AI?

This simple framework is surprisingly powerful. If you can’t explain what the company does, its business model might be confusing or nonexistent. If you can’t find any customers, its product might just be an idea, not a business. And most importantly, if it isn’t solving a clear problem—like reducing costs for hospitals or preventing fraud for banks—then who will pay for it in 2025 and beyond?

With this checklist in hand, you’re ready to start your investigation. Let’s apply this test to our first company, a player that’s using AI to transform how businesses communicate.

AI Stock to Watch: The Company Turning Your Voice into a Superpower

Let’s put that 3-point checklist to the test. Imagine asking your car to find the nearest coffee shop and, instead of getting confused, it understands you perfectly—even with the radio on. That’s the world a company called SoundHound AI ($SOUN) is building. It specializes in advanced conversational AI, creating voice assistants that are faster and more accurate than many you’ve used before. This is a classic example of a company with a clear mission, making it a candidate for investors looking for AI stocks with long-term growth potential.

So, who pays for this? Major brands. Car companies like Mercedes-Benz and Hyundai use SoundHound to create custom, in-car assistants without having to build the technology from scratch. Likewise, restaurants use its AI to take customer orders over the phone, freeing up busy staff. This directly answers our checklist questions: we know what they do (create voice AI), who their customers are (automakers, restaurants), and the problem they solve (the need for efficient, branded voice interaction).

This focus on serving businesses is SoundHound’s key advantage. While tech giants offer one-size-fits-all assistants, many brands don’t want a competitor’s logo and ecosystem inside their products. SoundHound provides the powerful engine without taking over the dashboard. This strategic niche is where investors hunt for unique machine learning stock opportunities, betting that specialized AI will become essential for industries that want to control their own customer experience.

By focusing on a specific, high-demand slice of the AI market, SoundHound has carved out a path to compete. It’s a compelling story and a clear illustration of how some of the best cheap AI stocks aren’t trying to beat the giants, but rather sell critical tools to them and others. While SoundHound focuses on how we talk to machines, other companies are using AI to help machines see the world.

AI Stock to Watch: Making Our Roads and Cities Smarter

While some companies teach AI to listen, others are teaching it how to see. This is where a company like Rekor Systems ($REKR) enters the picture, focusing its technology on the roads we drive on every day. Instead of just a simple traffic camera, imagine one that can instantly identify a vehicle involved in an Amber Alert or analyze traffic patterns in real time to prevent gridlock before it starts.

This technology is called computer vision, which is a way of training AI to understand video just like a human would. Rekor’s platform can do more than just record; it can recognize license plates, identify the make and model of a car, and detect accidents or dangerous road conditions automatically. For government agencies, this ability to turn raw video into useful information is a game-changer for public safety and traffic management.

Here we see another clear example of the “picks and shovels” strategy. Rekor’s customers are often Departments of Transportation and law enforcement agencies who need to upgrade their aging infrastructure without building an entire AI department from scratch. This is how many emerging AI technology companies are finding their footing—by selling targeted solutions to massive, established sectors. For investors, this creates new machine learning stock opportunities tied to essential government functions.

By providing the digital “eyes” for our roadways, Rekor is positioning itself as a key player in the development of smart cities. So far, we’ve looked at companies providing the senses for AI—the ears and eyes. But what about the companies building the powerful digital “brains” that process the information?

AI ‘Brains’ vs. ‘Brawn’: Where Are the Opportunities Under $20?

This brings us to a crucial split in the AI world: the ‘brawn’ versus the ‘brains’. Think of it like your smartphone. The ‘brawn’ is the physical hardware—the powerful chips and processors inside that do the heavy lifting. The ‘brains’ are the apps and the operating system that tell the hardware what to do. This distinction is key to understanding the difference between AI software vs hardware stocks.

The ‘brawn’ is where you’ll find industry giants like NVIDIA. Designing and manufacturing a single cutting-edge AI chip can cost billions, requiring massive factories and years of research. This immense barrier to entry is why a list of AI chip manufacturers stock rarely includes small companies and why finding cheap NVIDIA stock alternatives for AI in the hardware space is nearly impossible. They are building the expensive digital foundation for the entire industry.

The AI ‘brains,’ on the other hand, are a different ballgame. A small team of brilliant engineers can develop a game-changing AI application without needing a billion-dollar factory. They can build on existing technology to solve a very specific problem, like identifying songs (SoundHound) or managing traffic (Rekor). This lower cost of entry is precisely why most compelling AI opportunities under $20 are software companies.

Knowing this difference is your first tool for sorting through the noise. When you see a low-priced AI stock, you can now ask yourself: is this a company building the expensive physical ‘brawn,’ or are they creating the clever software ‘brains’ to solve a unique problem? With this framework in mind, you’re better equipped to start looking deeper.

Your Next Steps: How to Start Your AI Investing Journey

The world of AI investing can seem like an exclusive club, reserved for those who can afford thousand-dollar shares in household names. But now you can look past the hype and recognize the essential, smaller companies working behind the scenes—the “picks and shovels” of the AI gold rush. You have a framework to see value where others only see a low stock price.

This new perspective is your starting point for discovering AI stocks with long-term growth potential. Remember that a cheap share doesn’t mean low risk; your most powerful tool is understanding what a company actually does. The first step in learning how to invest in AI with little money is to invest your time, building a foundation of knowledge before ever committing a dollar. A diversified portfolio is built one well-researched company at a time.

Your journey from curious reader to informed investor begins with a single, manageable step. Don’t open a trading app—open a browser. Pick just one company from this guide that caught your interest and visit its “Investor Relations” page. Your only goal is to find their latest presentation and see if you can answer the simple questions from our checklist. This isn’t about finding a stock to buy; it’s about proving to yourself that you can do the research.

Every time you do this, you build a skill that is far more valuable than a hot stock tip. You are learning to separate the story from the substance, a capacity that will serve you for years to come. The goal isn’t just to find the next big thing, but to become the kind of investor who knows how to spot it, understand it, and make confident decisions on your own terms.