Unless you’ve been living under a rock, you must know that artificial intelligence (AI) stocks have been the hottest investments over the past year. It seems every month another AI-related company is soaring to new highs as investors scramble to get a piece of the action. The fear of missing out (FOMO) is real, and it’s not hard to see why. AI is transforming industries left and right, and the growth potential of this sector is truly mind-boggling.

However, many of the high-flying AI stocks you’re hearing about are already trading at astronomical valuations. Sure, they could keep climbing. But the downside risk is also skewed much higher at these nosebleed levels. One misstep or disappointing earnings report and these stocks could come crashing back down to earth.

So what’s a savvy investor to do? I think it’s time to look beyond the headline-grabbing names and dig a little deeper. There are still plenty of hidden gems in the AI space that have yet to be fully appreciated by Wall Street. Maybe they’re in an industry that’s currently out of favor, or perhaps they’re just quietly executing while the spotlight shines elsewhere.

Whatever the reason, I believe these under-the-radar AI stocks present incredible opportunities for multi-bagger gains. The AI revolution is still in its early innings, and the runway for growth is massive. Let’s take a look at three of the best hidden gems in this space!

Upstart (UPST)

I’ve been watching Upstart (NASDAQ:UPST) for a long time now, and for good reason. This stock soared 400% from my earliest bullish call back in April 2023 to its recent peak. It has come back down, but it’s still sitting on a hefty 75% gain since then. I believe Upstart has a lot more room to run in the coming quarters.

The weakness in the broader financial industry is definitely a headwind for Upstart’s growth. Banks are playing it safe right now, hesitant to experiment with new technologies in this shaky environment. Plus, with interest rates on the rise, people are thinking twice before taking out those big car and home loans. They’re still swiping credit cards and borrowing smaller amounts, but the big-ticket items? Many are hitting the pause button until rates come back down.

This has put a damper on Upstart’s business model, which revolves around partnering with banks and credit unions to provide consumer loans using “non-traditional variables like education and employment to assess creditworthiness.”

However, Upstart has significant upside potential once rates inevitably come down and the company lands more partnerships as borrowing picks up steam. In fact, the company already seems to be turning the corner. In the fourth quarter, Upstart saw a return to revenue growth and a solid beat on estimates. Losses also narrowed considerably, with earnings per share coming in 21.4% above expectations.

Looking ahead, analysts are forecasting earnings of 19 cents per share in 2025 and 60 cents per share in 2026. Revenue is also projected to climb from $581 million in 2024 to $888 million in 2026. I think Upstart could easily top $1 billion in revenue by 2026 if rates come down as anticipated.

Mitek Systems (MITK)

Mitek Systems (NASDAQ:MITK) specializes in technology that can sniff out fake IDs and other types of deception. The biggest use case for Mitek’s expertise is still unfolding, and it’s all about combating the looming threat of AI deepfakes.

With OpenAI recently unveiling its Sora text-to-video AI model, it’s only a matter of time before scammers start generating ultra-realistic fake videos of people. It’s April Fool’s Day after all, and we’ve all seen a photo or video on social media that may have fooled even the most astute observers among us. Voice and video AI are advancing at warp speed. Soon, it may become nearly impossible to distinguish between real humans and AI-generated scammers.

This is precisely why I believe Mitek Systems is poised for explosive growth in the years ahead. The company’s biometric and fraud detection capabilities will become increasingly useful as the deepfake “arms race” heats up.

Mitek’s stock is still trading at bargain levels right now. Trading at just 14-times forward earnings and 3.6-times forward sales, and down 39% from its peak, MITK stock looks like it has the ability to rebound nicely from here. In fact, the stock has already rebounded 52% over the past year alone.

Mitek has the potential to not only surpass its previous high, but to keep climbing as it expands margins and ramps up revenue growth to double-digit levels. The growth numbers may not be eye-popping at this very moment, but just wait until Mitek starts landing massive contracts as AI deepfakes become scarily realistic.

Data Storage Corp (DTST)

If you’ve been keeping an eye on the markets lately, you know that cloud computing and data storage stocks have been delivering returns that are nothing short of parabolic. And Data Storage Corp (NASDAQ:DTST), true to its name, is riding that wave in a big way.

I was fortunate enough to write about DTST back when it was trading at half its current price. And boy, has it taken off since then. At one point, DTST had skyrocketed nearly 170% from my initial buy rating. Sure, it’s pulled back about 25% recently after a somewhat disappointing Q4 earnings report, but I’m not losing any sleep over these numbers.

The company missed revenue estimates by 1.76%, coming in at $6.19 million versus the expected $6.3 million. And yes, the company posted a slight loss of 1 cent per share. Data Storage Corp still achieved profitability for the full year, and is guiding for robust revenue growth going forward.

The recent miss stings a bit, but I firmly believe this catalyst is already baked into the current stock price. Looking ahead, I see massive upside potential for DTST stock as the company continues to grow revenue and expand margins.

Wall Street got a little carried away after Data Storage Corp trounced revenue estimates by nearly 20% in Q3 and consistently beat by 5%-10% in the prior quarters. That said, this miss should serve as a reality check and set the stage for more measured expectations. That’s a good thing for long-term investors.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.