3 Under-The-Radar Small Caps Making New All-Time Highs

Key Points

• Small caps often offer the promise of more upside, but also greater volatility and potential for missteps.
• When performing due diligence on small caps, it's important to consider fundamental and technical factors.
• Three small-cap companies—AXT, NWPX Infrastructure, and Arteris—have each surged to new all-time highs, raising questions about the extent of further upside versus profit-taking.

When stocks hit all-time highs, investors have to decide whether to let their winners ride or cut back and take profits. The decision usually depends on your risk tolerance and investment timeline, but it's important to evaluate each company individually before making buy or sell decisions. And in the case of small-cap stocks, you’ll need to prepare for a little volatility if you decide to hold.

Small caps are more volatile than larger stocks because these companies often have fluctuating revenue and minimal (or even negative) net income. Most small caps trade on potential, so risk management is crucial when sizing positions and executing trades. While all-time highs usually precede even more all-time highs, smaller companies are still prone to rapid pullbacks that could offer better entry points if the long-term trend remains in place.

Three small-cap companies recently surged to new all-time highs: AXT Inc. NASDAQ: AXTI, NWPX Infrastructure NASDAQ: NWPX, and Ateris Inc. NASDAQ: AIP. Is it time to take profits, or do these stocks still have upside ahead?

AXT Inc: Feeding the Growing Data Center Power Surge

Based in Fremont, AXT is a semiconductor wafer manufacturer specializing in critical substrates, including indium phosphide (InP).

Substrates such as InP are used to connect the photodetectors in high-speed optical transceivers, a vital part of AI data center infrastructure.

Data center energy usage is expected to be a massive tailwind for companies like AXT; the Lawrence Berkeley National Laboratory estimates that total data center power use could reach 580 TWh by 2028, more than triple what data centers consumed in 2024.

InP is the catalyst driving AXTI shares up by nearly 600% year-to-date (YTD). During the company’s Q1 2026 earnings call on April 30, management reported $26.9 million in revenue, with InP sales accounting for more than half at $13.6 million. Net losses also shrank to negative 0.01 cents per share, and the company actually projects Q2 EPS between 0.06 cents and 0.08 cents.

Both earnings per share (EPS) and revenue exceeded analyst consensus estimates, and the Q2 guide indicates the company is headed for its first profitable quarter since 2022. Plus, a $100 million backlog provides plenty of revenue runway in the years ahead.

AXTI’s 500% surge boosted the company’s market cap over $7 billion, but the stock now trades at 80 times sales, and investors would be wise to watch for a pullback following April’s $550 million equity raise.

Shares stalled around the latest intraday all-time high of $110, allowing the Relative Strength Index (RSI) to move out of overbought territory. But the Moving Average Convergence Divergence (MACD) indicator formed a bearish crossover, suggesting a slowdown in buying momentum.

The long-term growth story remains in place with a strong backlog and data center tailwinds, but the valuation and technical signals are short-term red flags.

NWPX Infrastructure: Water Infrastructure Supplier With Multi-Decade Tailwinds

We now step outside the tech sector for a company with tailwinds that could extend far beyond the AI and data center boom.

According to the Environmental Protection Agency (EPA), the U.S. water infrastructure will need more than $625 billion in upgrades over the next two decades.

Replacing billions of dollars' worth of piping infrastructure is a long-term tailwind for NWPX Infrastructure, which produces pipes and concrete infrastructure. Business is booming so far this year: the company just reported record quarterly revenue of $138 million and EPS of $1.08, the latter beating consensus by nearly 40%. The company’s backlog also now exceeds $430 million, and its cash position is expected to end 2026 within a range of $50-56 million.

NWPX is up 75% YTD, but it's still undervalued relative to market averages. The stock trades at just 22 times forward earnings and with a Price-to-Sales (P/S) ratio of 2.01, and its balance sheet shows practically zero debt.

Shares jumped more than 25% in the week following the Q1 2026 earnings beat on April 30, and technical signals are in place for an extended rally. The stock is now trading well above its 50-day moving average, but there’s less concern of a violent pullback given its fundamental strength and relatively low beta (1.06).

Arteris Inc: High-Margin Licensing Model Boosted by AI Training Workloads

Ateris is a $1.37 billion market cap ‘picks and shovels’ play in the semiconductor industry.

Instead of building fabs to produce chips, Arteris develops interconnectivity and integration software that connects various CPUs and GPUs.

This System-on-a-Chip (SoC) is sold in the typical software model, with high-margin intellectual property licenses that must be renewed. Gross margins reached 92% in fiscal Q4 2025, and the full-year revenue of $70.6 million was a 22% YOY increase.

The company has long-term structural tailwinds from the growing workload of training AIs, as each GPU cluster requires an IP license to move data.

The stock broke out of a multi-month consolidation pattern following the company’s collaboration announcement with MIPS, gaining more than 60% in just 30 days.

The next catalyst is around the corner, too; fiscal Q1 2026 results are due May 12, and the company will need to continue posting strong bookings numbers to justify its new valuation.