Innodata Inc. (NASDAQ:INOD) has been given a higher valuation by Wedbush, with the firm raising its price target to $120 from $100, citing increasing confidence in the company's ability to drive revenue growth through fiscal 2026 and beyond as demand for AI data annotation and model training services expands.
Shares of Innodata surged 14% on Thursday afternoon to about $123.
Following a series of meetings with Innodata management, including Chief Executive Officer Jack Abuhoff and Senior Vice President of Finance and Corporate Development Aneesh Prendharkar, Wedbush analysts wrote that the company's products and services are becoming "essential" for training artificial intelligence models and supporting the next generation of AI applications.
The firm highlighted Innodata's increasing role in supporting frontier AI models through data annotation, training, trust and safety, evaluation infrastructure, and physical AI initiatives. According to Wedbush, the company's capabilities position it to benefit as AI evolves from text-based systems toward multimodal and autonomous applications.
The analysts also pointed to the enterprise market as Innodata's largest long-term growth opportunity. Wedbush wrote that the rise of agentic AI is creating demand for third-party testing and validation services that help enterprises ensure AI agents operate within established guardrails and avoid hallucinations. Such services can also help businesses manage token utilization costs, an area that has become a growing focus as AI deployments scale.
While many enterprises remain in the proof-of-concept stage for agentic AI implementations, Wedbush believes Innodata is well positioned to capture additional market share as adoption broadens.
“The largest opportunity for expansion for INOD remains the largely untapped enterprise market where the agentic AI era is starting to take hold with increasing focus on improving agent performance with deployments accelerating across the enterprise,” they wrote.
The analysts also referenced the company's relationships with major hyperscalers and frontier model developers, while describing the federal government as a smaller but potentially expanding opportunity. Wedbush expects demand for AI testing services within government agencies to increase over time as more advanced models are evaluated.
On the operational side, the firm noted that Innodata is balancing growth investments with profitability, particularly through measured spending on sales and marketing initiatives aimed at increasing brand awareness and expanding its customer base.
Wedbush wrote that the company has the flexibility to scale investments alongside customer demand while maintaining a disciplined approach to long-term profitability.