This Small-Cap Stock Has Quietly Crushed the S&P 500 So Far in 2026 and Looks Poised to Run Higher

Despite the popularity of artificial intelligence (AI) stocks on Wall Street, there are still some opportunities in the sector that most investors haven't noticed yet. Finding them before everyone else can help you to achieve market-beating returns.

M-Tron Industries (NYSEMKT: MPTI) might be one of those stocks. It's a small cap, but at least in some parts of the market, it's not quite undiscovered anymore, because those in the know have bid it up. The stock has more than doubled year to date, and it's a 13-bagger since it was spun off as a separate company in late 2022. The company recently secured a $6.8 million follow-on order for counter-drone radar programs, but that's just the tip of the iceberg for this company, which still has a market cap below $400 million.

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What M-Tron Industries does

M-Tron Industries specializes in high-performance radio-frequency components and solutions. It supplies them to several aerospace companies and government organizations.

The AI connection hasn't yet appeared in M-Tron Industries' financial results, but its sales were still up a solid 15.3% year over year in the first quarter. Its 38.4% year-over-year backlog growth also shows that the company is heading in the right direction, and all that growth is coming with double-digit net profit margins.

M-Tron Industries' products can make AI data centers more efficient by eliminating hardware noise, enabling data to move and be processed seamlessly. These components can also help AI data centers transfer large amounts of data between AI chips more quickly.

Nvidia's push to AI-RAN can present an opportunity for M-Tron Industries

The AI infrastructure industry still revolves around Nvidia, and some of its success could flow to M-Tron Industries. Nvidia issued a press release earlier this year expressing its desire to build an AI-RAN architecture. That fancy acronym stands for "AI radio access network." Nvidia touts this architecture as a product that could enable new AI services, optimize existing ones, and achieve higher margins.

M-Tron Industries' high-performance radio-frequency components can be key parts of the AI-RAN puzzle. It has competitors making similar hardware, but M-Tron Industries' robust customer list gives it an edge. We could see the narratives around radio frequency component providers play out in a similar way to what has happened to memory makers like Micron, Sandisk, and Silicon Motion Technology as demand for their wares has soared.

M-Tron Industries is already growing its fundamentals, even without the potential tailwind of an AI-RAN opportunity, but that's a compelling opportunity to watch. Also, it's not hypothetical.

Northeastern University recently unveiled a commercially viable AI-RAN system. M-Tron Industries wasn't part of this research, but it relied on high-performance radio-frequency components. Any company that produces those components has a massive head start, and is likely to be able to capitalize on the small but growing AI-RAN market.

The space opportunity

Investors aren't just paying attention to AI. They are also looking at space exploration, especially after Space Exploration Technologies, aka SpaceX, delivered a record-breaking IPO last week and exceeded a $2 trillion market cap. M-Tron Industries is well-positioned to benefit from this trend as well.

High-performance radio frequency components are essential for all satellites launched into space. They enable satellites to communicate with terrestrial infrastructure.

M-Tron Industries already works with aerospace companies, giving it a front-row seat to the space economy. The company also has more than 150 design wins on satellite platforms and manned spacecraft.

The space sector is likely to become an increasingly important part of the global economy. Elon Musk is adamant about his plans to use SpaceX rockets to put constellations of AI data center satellites in orbit. His companies normalized reusable rockets that can land vertically, broadly popular electric vehicles, and other innovations. If anyone can pull it off, it's him.

All those AI data center satellites will need high-performance radio-frequency components, and if SpaceX can deploy them in the volumes Musk is hoping for, M-Tron Industries might see its revenue multiply quickly based on that market alone. Investors may have to wait a bit for M-Tron Industries to fully capitalize on these longer-term tailwinds, but the wait may be well worth it.

Marc Guberti has positions in Silicon Motion Technology. The Motley Fool has positions in and recommends M-tron Industries, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.