The tech industry is currently, by far, the most important in the market. Software companies and related industries have been driving most of the market’s gains recently. Recent AI hype means the tech industry’s influence is felt across every part of the economy, as companies race to automate their processes and integrate AI into their products and services.

In fact, I would dare you to look up any well-established company and search for the keyword “AI” in their earnings calls. More likely than not, these companies will mention how they use AI in their operations several times.

Thus, I think it makes sense to invest in some up-and-coming tech firms. Tech penny stocks could pay off massively in the long-run, for those who make the right bets. Of course, it’s unlikely investors are going to hit it big, as most stocks below $1 are more like lottery tickets. However, if even one of these turns out to be successful, investors stand to potentially see 10X gains or more.

Here are three companies that may be worth trowing some pocket change at.

Webstar Technology (WBSR)

Webstar Technology (OTCMKTS:WBSR) is a data communications company. I’m quite bullish on Webstar’s prospects. The company produces key products like Gigabyte Slayer Software, WARP-G Software, and Webstar eCampus. These should position the company well in the booming data industry over the long-term. However, as of the time of writing, the company does not have any revenue.

Now, Webstar does state on its website:

“…Gigabyte Slayer™ will make mobile device networks faster and safer, at a lower cost, and for everyone! You will be able to web surf, stream video, and download more data and with less restrictions.

Warp-G™ enables SMB and Enterprise organizations to experience an optimal data experience by enhancing data encryption, optimizing data compression, improving data storage by maximizing the available storage medium, coupled with enabling greater data speeds than previously achievable.”

Of course, with a market cap under $22 million and low trading volume, WSTG is a volatile stock to consider. That said, the stock’s impressive 96% year-to-date surge suggests the market is starting to wake up to Webstar’s potential. I believe this under-the-radar gem could deliver multi-bagger returns, if the company lands big contracts going forward. Again, this company remains pre-revenue, so investors should play this one very carefully.

Inuvo (INUV)

Inuvo (NYSEMKT:INUV) is a top advertising technology company that uses artificial intelligence to serve the marketing and advertising needs of brands. I believe Inuvo’s first quarter 2024 results show the company is on the right track to capitalize on the use of AI in the advertising industry.

In Q1, Inuvo posted 44% year-over-year revenue growth to $17 million. Moreover, the company has a goal to surpass $100 million in annual revenue. At this level, the company expects to achieve positive adjusted EBITDA and free cash flow. They are not quite there yet. However, the company reiterated this goal, and I think it is possible, given Inuvo has a history of beating earnings. I expect advertising revenue to come in much higher in future years.

Inuvo is well-positioned to ride the wave of surging demand for AI-driven advertising. By putting IntentKey’s capabilities directly into the hands of agencies and brands via self-serve access in demand-side platforms (DSPs), Inuvo could be on the cusp of explosive growth.

However, I’d recommend staying wary of investing too much in this high-potential stock. The AI hype cycle could turn from tailwind to headwind if recent hype fades. Nonetheless, with Inuvo consistently beating earnings estimates and analysts seeing nearly 300% upside potential to the company’s current stock price, I believe the risk-reward proposition appears to be skewed to the upside.

Pixelworks (PXLW)

Pixelworks (NASDAQ:PXLW) provides visual processing solutions for mobile device home entertainment applications. The company’s first-quarter results were solid, with revenue coming in at the midpoint of guidance, growing 61% year-over-year to $16.05 million.

Mobile revenue was the star of the show. This segment grew nearly 200%, making up a record 61% of total sales. Pixelworks’ newer X7 Gen 2 visual processor drove much of this growth, along with increased TrueCut motion licensing. The company’s gross margins also rose 600 basis points sequentially to more than 50%.

In addition, Pixelworks has already nine IRX-certified games, and tuned their processors for more than 100 additional games. I believe IRX could become a major growth engine for Pixelworks due to mobile gaming becoming increasingly popular.

Yes, the company is still unprofitable, losing 7 cents per share in Q1. But these losses are narrowing. And over time, I expect Pixelworks’ robust top-line momentum to drive key margin expansion ahead as rate cuts kick in. Plus, the company’s cash burn was minimal, as operating expenses were well-contained.

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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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.