While the innovation sphere constantly focuses on artificial intelligence these days, the top players in the field have gotten a lot of attention – maybe too much attention. Recently, we’ve seen the mighty Nvidia (NASDAQ:NVDA) lose a step from its previously mercurial ways. And that may open the doors for considering small-cap AI stocks to buy.

Let’s get the bad news out of the way first. Betting on small-capitalization firms of any sector presents higher risks than wagering on established enterprises. When you’re dealing with consistently profitable companies, you enjoy a higher predictability flow. Unfortunately, higher predictability generally limits upside potentiality. The two characteristics typically share an inverse relationship.

Now, the positive side of the spectrum is that when smaller entities jump, they tend to do so quite robustly. That’s due to the law of small numbers and other favorable dynamics. If you can handle the volatility risks, these small-cap AI stocks may bring more bang for the buck. Below are some ideas to consider.

Aeva Technologies (AEVA)

Headquartered in Mountain View, California, Aeva Technologies (NYSE:AEVA) focuses on digital intelligence as it relates to automated mobility. It specializes in the design and development of advanced lidar sensing systems. Specifically, it harnesses the power of its proprietary 4D lidar solution, which enables rigorous calculations of surrounding objects in space and time. Long story short, Aeva is able to proactively avoid bad situations as opposed to merely reacting to them.

Scientifically, that makes AEVA one of the top small-cap stocks. Unfortunately, the market operates on more than just scientific fundamentals. There are also myriad other factors involved, including pure human emotions. Those emotions unfortunately are pessimistic, with shares slipping nearly 29% since the start of the year. So, what gives?

That’s the reality of diminutive enterprises, I’m afraid. Still, if you can handle the volatility, analysts believe that Aeva could post sales of $8.62 million this year. If so, that would just about represent a doubling from last year’s result of $4.31 million.

Notably, in fiscal 2025, experts forecast the top line to hit $23.55 million, with a high-side target of $32.5 million. It’s risky but an enticing example of small-cap AI stocks to consider.

Duos Technologies (DUOT)

Based in Jacksonville, Florida, Duos Technologies (NASDAQ:DUOT) broadly falls under the application software arena. Per its public profile, the company designs, develops and operates intelligent technology solutions. Its innovations in AI algorithms, computer vision, object detection and deep neural networks offer relevancies in the field of automated logistics and similar industrial and governmental solutions.

On paper, it’s one of the most-promising ideas for small-cap AI stocks. To be fair, over the past 52 weeks, DUOT stock lost 61% of equity value. However, this volatility has been stabilizing. Since the beginning of this year, DUOT has only lost a bit more than 1%. Technically speaking, there may be a pattern of higher lows forming, which could attract market speculators.

Financially, the company could use some work. During the trailing 12 months (TTM), it incurred a net loss of $11.85 million. Revenue during the period reached only $5.9 million. However, in fiscal 2024, covering experts believe that sales could rise 95.2% to hit $14.58 million.

Moving out to fiscal 2025, the top line could expand by 39.2% to reach $20.3 million. It’s a long shot but it could also be very enticing for the gambling type.

DarioHealth (DRIO)

Hailing from New York City, DarioHealth (NASDAQ:DRIO) falls under the healthcare sector. Specifically, it’s involved in health information services. According to its corporate profile, DarioHealth provides a digital therapeutics platform along with a suite of solutions delivering personalized and dynamic interventions. Essentially, the company leverages AI to address the needs of patients with chronic conditions.

With the intersection of healthcare and AI promising to deliver profound innovations and positive outcomes, DarioHealth stands on viable ground. Wall Street appears to be waking up to the narrative. Yes, on a year-to-date basis, DRIO stock slipped more than 28%. However, last Friday, shares gained just over 11% in a single session. During that week, DRIO returned over 15%.

To be sure, DarioHealth is a higher-risk play among small-cap AI stocks. During the TTM period, it lost $49.35 million on sales of only $19.05 million. However, analysts believe that by the end of the year, the top line could expand by 72.6% to reach $35.13 million.

Patient investors will potentially want to wait until fiscal 2025. That’s when sales could soar to $46.2 million, up 31.5% from projected 2024 revenue.

On the date of publication, Josh Enomoto did not have (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.