2 Hidden AI Gems Set to Soar in May 2025

Putting money into small-capitalization firms within quickly growing potential markets has been shown to yield substantial returns over an extended period. This piece highlights two Canadian artificial intelligence equities that deserve a spot on your monitoring list at present.

Let’s see why.

Is purchasing shares of this AI company advisable at present?

Valued at a market cap of $141 million, Intermap Technologies ( TSX:IMP ) is a geospatial intelligence firm offering high-accuracy 3D topographic information, images, and analytical tools.

Intermap provides digital terrain models, radar images, and tailored cartography products via software interfaces and Data-as-a-Service options such as InsitePro and NEXTView. Their geographic information services cater to various uses, ranging from hazard evaluation to engineering projects, sustainable power generation, and transport infrastructure development.

Analysts anticipate that Intermap will boost its revenue from $17.64 million in 2024 to $55.5 million by 2026. The company’s AI stock concluded 2024 with a negative cash flow of $3.81 million. Nevertheless, this figure is projected to improve significantly to $12 million in 2026, reflecting an impressive margin of approximately 22%. Should the TSX stock Is valued at 25 times future free cash flow, it should increase by over twice within the coming year.

In Q1 of 2025, Intermap Technologies saw their revenue increase by 153%, reaching $4.3 million compared to $1.7 million during the same time in the previous year. This geospatial intelligence firm reported a 28% pro forma adjusted EBITDA margin and moved into profit territory with a net income of $833,000, as opposed to a net loss of $839,000 in the prior year.

Across all divisions, Intermap experienced growth, marked by a dramatic 402% surge in Acquisition Services revenue to $2.4 million, largely due to governmental agreements, such as those with Indonesia. Additionally, value-added data revenues climbed by 96%, reaching $510,000, and software and solution earnings expanded by 43% to hit $1.3 million, attributed mainly to an increase in international insurance sector activities.

During the quarter, Intermap bolstered its financial standing by securing $8.7 million, bringing its total assets to $19.2 million. Additionally, the firm has filed for registration as a foreign private issuer with the SEC (Securities and Exchange Commission), moving closer towards obtaining a listing on a major US stock exchange.

Is this AI stock priced below its value?

With a market capitalization of $102 million, Xtract One ( TSX:XTRA ) offers AI-driven threat detection gateways designed to automatically screen individuals for hidden weapons and restricted articles. Their product lineup encompasses SafeGateway, SmartGateway, and Xtract One Gateway systems, which boost safety checks at locations such as arenas, gaming establishments, event spaces, office environments, and educational institutions.

Analysts tracking the TSX tech stock anticipates its revenues climbing from $16.4 million in the fiscal year 2024 (which concludes in July) to approximately $83 million by the end of fiscal 2029, showcasing an impressive compound annual growth rate exceeding 38%.

Furthermore, the firm is expected to show a free cash flow of $22.1 million for fiscal year 2029, as opposed to a negative cash flow of $4.9 million in 2024. Should the AI stock be valued at 20 times its future free cash flow, it might see an increase exceeding 300% within the coming three-year period.

In the fiscal second quarter of 2025, Xtract One reported bookings totaling $13.5 million, marking a 250% increase compared to the prior year and surpassing their earlier high of $9.6 million. This AI-driven firm specializing in weapon recognition systems witnessed an uptick in their overall booking backlog to $37 million, up from $22 million during the corresponding timeframe the previous year.

The revenue for the quarter amounted to $3.4 million, representing a slight rise from $2.9 million in the previous year. The expansion of top-line metrics was limited due to the scheduling of deployments and a transition towards subscription-based agreements. Despite these challenges, the company managed to boost its gross margins to 70%, an improvement from 61% the prior year, all while cutting down on operational costs effectively.

In the second quarter, healthcare became a key area for expansion, making up approximately 30% of all reservations due to hospitals addressing increasing security issues and complying with new laws requiring weapon inspections. Additionally, channel partners achieved impressive outcomes, contributing to about 50% of installed systems and almost half of the total recognized income over this period.

The recently launched One Gateway product has seen substantial adoption within educational sectors and has also created prospects in manufacturing and distribution centers, which represent an $8 billion marketplace.

The management anticipates robust expansion during the latter part of fiscal year 2025, pointing to a promising pipeline valued at $100 million, including $40 million from advanced stage projects, which sets up Xtract One for sustained advancement towards achieving profitability.

The post 2 Leading AI Stocks to Watch in May 2025 appeared first on The Motley Fool Canada .

Is it wise to put $1,000 into Intermap Technologies Corporation at this moment?

Prior to purchasing shares of Intermap Technologies Corporation, keep this in mind:

The Motley Fool Stock Advisor Canada The analyst team has recently pinpointed what they think could be the Leading Shares to Watch from 2025 Onwards For investors looking to purchase now... Intermap Technologies Corporation did not make the list. The top stocks selected have the potential to generate significant gains over the next few years.

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Fool contributor Aditya Raghunath The Motley Fool does not hold any shares in the stocks discussed. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .