Buy 5 Mid-Cap AI Infrastructure Stocks Amid U.S.-China Tariff Deal Hope
Wall Street rallied significantly on May 12 following positive news related to a tariff and trade deal between the United States and China. U.S. stock markets have faced massive volatility ever since President Donald Trump imposed a 10% baseline tariff on each and every country with which it trades. Tariff rates were much higher for several major trading partners of the United States.
U.S. technology behemoths, especially artificial intelligence (AI) giants, depend on a cheaper source of imports for high-end products. Consequently, AI stocks suffered severely fearing higher input costs and a near-term recession in the U.S. economy.
At this stage, it should be prudent to invest in mid-cap AI infrastructure stocks with a favorable Zacks Rank. Five such stocks are: Innodata Inc. INOD, Five9 Inc. FIVN, UiPath Inc. PATH, InterDigital Inc. IDCC and AeroVironment Inc. AVAV. Each of these are stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
U.S.-China Tariff Deal Hope
On May 12, the United States and China agreed in a discussion in Switzerland to reach a temporary agreement that 'reciprocal' tariffs between both countries will be cut from 125% to 10%. Meanwhile, United States' 20% tariffs on Chinese imports relating to fentanyl will remain intact, meaning total tariffs on China will be 30%.
The United States had reached a tariff deal with the U.K. last week. The Trump administration is also involved in negotiation with its 17 other large trade partners including India for trade and tariff.
The chart below shows the price performance of our five picks year to date.
Innodata Inc.
Innodata has established itself as a crucial partner in this AI revolution by providing high-quality data needed to train advanced language models. INOD is expected to benefit from massive demand for supplying state-of-the-art data engineering to large language model building and maintenance over the long term.
INOD came up with first-quarter 2025 earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.17 per share. Revenues of $58.34 million surpassed the Zacks Consensus Estimate by 1.24%.
INOD's football-to-dime analogy effectively illustrates the vast untapped potential in AI data — if all possible human knowledge that could be captured as data represents a football, today's best AI models have only trained on data equivalent to the size of a dime.
The recent beta launch of Innodata's Generative AI Test & Evaluation Platform, powered by NVIDIA technology, represents a strategic expansion of the company's AI services portfolio. Investors should monitor how effectively INOD is commercializing new offerings such as the AI Test & Evaluation Platform.
The long-term growth of Innodata's business model is set to be backed by big techs, other big enterprises, industry-specific demand, federal agencies, public relations and healthcare. One of the most promising aspects of INOD's strategy is its successful customer diversification efforts.
Innodata has an expected revenue and earnings growth rate of 40.3% and -16.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings remained the same over the last 60 days.
Five9 Inc.
Five9 provides intelligent cloud software for contact centers in the United States, India, and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions.
FIVN's platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.
FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. On Feb. 19, Five9 introduced its Intelligent CX Platform powered by Five9 Genius AI on the Google Cloud space. FIVN also released new Five9 AI agents tailor-made for Google Cloud.
Five9 has an expected revenue and earnings growth rate of 9.6% and 11.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
UiPath Inc.
UiPath provides an end-to-end automation platform that offers a range of robotic process automation solutions primarily in the United States, Romania, the United Kingdom, the Netherlands, and internationally. PATH offers a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization.
The PATH platform's embedded AI, ML, and NLP (Natural Language Processing) capabilities improve decisioning and information processing. PATH introduced new generative AI features, including specialized LLMs (Large Language Model) such as DocPATH and CommPATH, and Context Grounding, to enhance automated AI models for specific business needs.
UiPath has an expected revenue and earnings growth rate of 6.8% and -1.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.3% over the last 60 days.
InterDigital Inc.
InterDigital is benefiting from solid licensing momentum in the smartphone business. IDCC's global footprint, diversified product portfolio and ability to penetrate in different markets are impressive. IDCC reported strong first-quarter 2025 results, with both the top and bottom lines beating the Zacks Consensus Estimate.
IDCC's AI-powered Receiver Design for Future Wireless Communications was validated by Keysight Technology. The state-of-the-art innovation also optimizes throughput performance, reduces communication overhead and simplifies receiver architecture, making it suitable for 6G applications.
Apart from IDCC's strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive considerable value, considering the massive size of the market it licenses. Focus on advanced 5G and 6G research is a positive.
InterDigital has an expected revenue and earnings growth rate of -20% and -21.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.3% over the last 30 days.
AeroVironment Inc.
AeroVironment designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. AVAV operates through UnCrewed Systems, Loitering Munition Systems, and the MacCready Works segments.
AVAV applies advanced technological innovations, seamlessly integrating AI and cutting-edge computer vision into agile, effective solutions. AVAV supplies uncrewed aircraft and ground robot systems, loitering munitions systems, and related services primarily to organizations within the U.S. Department of Defense, other federal agencies, and to international allied governments.
AeroVironment also offers airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related to unmanned aircraft systems.
In addition, AVAV offers small UAS products, including training, spare parts, product repair, product replacement, maintenance, and upgrade services. Further, it develops mars Helicopters and high-altitude pseudo-satellite UAS systems.
AeroVironment has an expected revenue and earnings growth rate of 25.1% and 43%, respectively, for the current year (ending April 2026). The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days.
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