Top 3 Cutting-Edge Micro-Caps Set for 2025 Growth

December 17, 2024 at 07:45 AM EST

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As 2025 approaches, several promising micro-cap stocks are gaining attention for their potential to disrupt key industries. These companies, though small in market size, are making significant strides with innovative technologies and strategic advancements. From revolutionary AI-powered chips to life-changing healthcare devices and cutting-edge 3D metrology solutions, these firms are well-positioned for future growth. Here's a closer look at three micro-cap stocks that could be on the verge of major breakthroughs in the coming year.

BrainChip: Aiming to Power Edge AI With Brain-Like Efficiency

BrainChip (OTCMKTS: BRCHF) is a micro-cap software and semiconductor company focused on neuromorphic computing. The goal of neuromorphic computing is to mimic the way the human brain processes information. This technology's value is in running AI and machine learning tasks with much lower power consumption than other AI accelerator chips. At this point, BrainChip is largely considered pre-revenue. Although, it has had quarters where it generated a couple of million in revenue. The company has mostly been obtaining patents for its technology and improving its designs.

The lower power consumption aspect of the firm’s chips is vital to its value proposition. It makes these chips ideal for AI-driven edge computing. This is where chips process information close to the source where they receive it, rather than sending it back to a data center for processing. It is especially beneficial to reduce power use in devices that may go a long time without charging, like electric vehicles.

Recently, optimism around this company has emerged after the U.S. Air Force Research Laboratory awarded it a $1.8 million contract. The revenue aspect of it is somewhat insignificant, but it represents an opportunity for the company to expand. The military wants to use BrainChip's tech in mobile platforms, like drones, robots, and aircraft. The press release indicates that the company’s technology has now entered Phase II of the Small Business Innovation Research program. If the company can progress into Phase III of this program, it could transition into operational use by the military. This shows progress toward much more significant revenue generation, making this a stock to watch in 2025.

Myomo: Transforming Lives With Robotic Mobility Solutions

Myomo (NYSEAMERICAN: MYO) is a healthcare micro-cap that has had a solid year in 2024 as it gained traction with its innovative MyoPro device. The MyoPro is a robotic arm brace. It helps people with neuromuscular disorders and upper body paralysis. The brace senses and amplifies electrical signals from the user's body. It helps restore movement and improve the completion of daily tasks. The company is still very small, with only $25 million in revenue over the past 12 months. However, optimism has been growing due to a drastic acceleration in the company’s revenue growth. In Q1, growth was just 9%. However, in Q3, that figure ticked up to over 80%. Record sales in Q3 of $9.2 million are nearly 2.5 times higher than Q1 sales of $3.7 million.

In May, the company reached an important milestone. It received its first lump-sum reimbursements for the MyoPro from the Centers for Medicare & Medicaid Services (CMS). CMS oversees Medicare and Medicaid. It pays healthcare providers and suppliers for patients' care. The payment by CMS is an endorsement of MyoPro as an efficacious and cost-effective therapy.

Additionally, it greatly increases the probability of further purchases. It provides peace of mind for beneficiaries that their out-of-pocket costs will be significantly reduced if they use the MyoPro. It also increases the likelihood of healthcare providers recommending the devices. It provides them with evidence that they will receive their payment back in a timely manner. Myomo believes this Medicare reimbursement precedent doubles its total addressable market. This makes it a stock to watch in 2025.

FARO: Improving Profitability and Prospects for Growth in 3D Metrology

FARO Technologies (NASDAQ: FARO) is a significantly larger business than the other two. It generated nearly $350 million in sales over the past 12 months. FARO makes three-dimensional (3D) measurement hardware and software. Its products scan objects and create accurate digital models. Engineers can alter these models and combine them to build a product or system. Its products have use cases in many industries, including automotive, aerospace, and machine fabrication.

FARO has made solid progress in its profitability in 2024. It has turned its operating margins positive for the last 12 months, and it has normalized net income margins for the first time since early 2019. Now, it needs to flip its falling sales. Analysts project that the company will return to sales growth in the last nine months of 2025. New products like the Quantum Arm X and the Focus Premium Max provide improved quality and expand the use cases FARO can serve. The prospect of these products revitalizing growth, combined with FARO’s massively improved profitability, makes this a stock to watch in 2025.

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Top 3 Cutting-Edge Micro-Caps Set for 2025 Growth

BrainChip: Aiming to Power Edge AI With Brain-Like Efficiency

Myomo: Transforming Lives With Robotic Mobility Solutions

FARO: Improving Profitability and Prospects for Growth in 3D Metrology

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