Why Innodata Stock Skyrocketed Higher Today
Key Points
BWS Financial made Innodata one of its top picks for 2026.
The investment firm placed a $110 price target on the stock, implying nearly 80% upside.
Innodata recently landed its first government contract and could benefit from the rise of sovereign AI.
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Shares of AI-focused, global data engineering upstart Innodata (NASDAQ: INOD) rallied 16% higher as of noon ET on Monday. This morning, investment firm BWS Financial named Innodata one of its "top picks" for 2026 thanks to the company's AI potential. In addition to raising its rating from "buy" to "top pick," BWS set a $110 price target on Innodata stock, implying nearly 80% upside -- even after today's run.
Innodata: The newest AI growth stock?
Innodata is a "picks and shovels" play to the AI and Generative AI industries. The company acts as a consultant for both AI builders and AI adopters, whether it helps train large language models (LLMs) or implement agentic AI capabilities. With LLMs, for example, Innodata provides data engineering services to:
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- pretrain the LLM on massive amounts of internet data
- fine-tune the responses
- set up reinforcement learning from human feedback to train a reward model
- red team AI systems to discover vulnerabilities (simulate attacks to test resiliency)
Image source: Getty Images.
Consulting firm McKinsey & Company believes generative AI IT services like Innodata's will be a $200 billion industry by 2029. BWS believes Innodata is rapidly becoming a leader in this burgeoning niche, and I'd tend to agree, judging from the fact the company already counts five of the Magnificent Seven as customers.
Now, Innodata is expanding its business with the federal government, recently landing a $25 million contract in the last quarter. This could create inroads for the company as a consultant of choice when deploying sovereign AI systems globally, which could drive a new wave of growth for Innodata. With Wall Street expecting the company's sales to grow by 26% in 2026 -- and the AI growth story still in its early chapters -- I can't help but agree with BWS on Innodata.
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Josh Kohn-Lindquist has positions in Innodata. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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