AI Investors Are Looking Past Megacap Stocks. Could This One Be the Next Big Winner?

Megacap tech stocks have been some of the highest-profile artificial intelligence (AI) stocks on the market in recent years, but the outlook for the AI space is changing. Some investors are now giving more serious consideration to smaller companies. While they may not be as dominant in their arenas, the benefit of investing in them is that it takes far less revenue and earnings growth on a dollar basis to move the needle for those companies, and less of an absolute market cap gain to send them soaring.

For example, it won't make much of a difference for new investors if Nvidia, a $4.5 trillion company, gains another $100 billion in market cap. However, if someone puts a few thousand dollars into a $5 billion company and it gains $100 billion in value, that would be a massive return.

That's the logic of investors who are looking at smaller AI companies. If you're currently on the hunt, Zeta Global Holdings (NYSE: ZETA) has the potential to be a long-term winner.

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The ultimate marketing toolkit

Zeta operates an AI-powered marketing platform that helps businesses acquire and retain customers more effectively. This platform can optimize ad campaigns in real time and lets companies set up AI agents that can enhance workflows and act as customer support.

Zeta's marketing platform is a key reason it has delivered 17 consecutive "beat and raise" quarters. In Q3, it grew its revenues by 26% year over year. Management also forecast that in 2026, its top line would increase by 21% compared to its expected 2025 result.

Companies like Salesforce and HubSpot also offer marketing platforms. However, Zeta is growing at a faster rate than those companies due to its focus as a customer data platform, while Salesforce and HubSpot focus more on customer relationship management software.

Zeta clientele comes from a diverse set of industries, and includes more than 450 "scaled customers" -- those spending $100,000 per year or more on its services.

Because its revenues are largely recurring, its sales scale over time. Zeta is continuing to win large customers, and last quarter, it even added 12 "super scaled customers" (those spending at least $1 million annually), bringing that total to 180.

Zeta's growth also comes with profitability close on the horizon. Its negative net margins are in the low single digits, and it has been getting closer to breakeven. Zeta also reported a positive net operating income in Q3 after delivering net operating losses in Q1 and Q2. Even then, though, its negative margins in those two quarters narrowed sequentially. The company has a real shot at generating consistent profits by the end of 2026.

Zeta's long-term outlook suggests meaningful expansion

Its 2026 guidance looks strong, but that's not the end of the story. In its supplemental Q3 2025 earnings presentation, management said that revenues are on pace to maintain their 20% compound annual growth rate (CAGR) through 2028. If it meets that target, Zeta would book sales of $2.1 billion that year. Relative to that, its current $6 billion market cap looks like a bargain.

Although this revenue projection looks impressive, Zeta has a history of beating and raising its guidance. Management told investors in 2022 that it aimed to maintain a 22% CAGR through 2025, but it actually had a 30% CAGR during that stretch -- and the stock gained 140% over that period.

Zeta's revenue growth forecasts may go up as the company continues to beat expectations. Its largest customers also tend to increase their spending with it over time as their needs and objectives change. Investors may want to interpret the projected 20% CAGR as the floor, because this AI company's history suggests that its growth rates may be a bit higher between now and 2028.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends HubSpot, Nvidia, and Salesforce. The Motley Fool has a disclosure policy.