The recent hotter-than-expected inflation report probably means you’re going to hear “higher for longer” from the Fed this year, at least until inflation starts to cool down more meaningfully. This isn’t good news for penny stocks. However, things haven’t been that great for smaller companies in the past few years regardless. The companies that have managed to keep their lights on in the past two years have started to deliver meaningful gains year-to-date, but the Russell 2000 index remains below 2021 levels.
Most penny stocks remain depressed so far in 2025. But this is also a good opportunity to buy into them, especially those that aren’t going through a cycle of dilution and reverse stock splits. Some of these penny stocks have solid future potential and are in high-growth industries with a massive runway for growth. Such penny stocks could deliver multibagger returns, and we’ll be looking into three such stocks in this article.
Do note that these are high-risk, high-reward bets. Chasing multibagger upside potential of course means you’re exposing yourself to a lot of downside risk.
Blaize Holdings (NASDAQ:BZAI) is a company that specializes in AI-enabled edge computing. It has hardware and software for real-time AI processing and focuses on low power consumption and cost efficiency. It is one of the only pure-play AI edge computing public companies. Moreover, what it does also aligns well with the emphasis on efficiency post-DeepSeek.
Nonetheless, BZAI stock has done the opposite of what you’d expect such a stock to do. BZAI stock is down 77% in just the past month as its TTM gross profit stands at -$1.24 million with a margin of -63%. Moreover, R&D costs are forecasted to rise from $49-52 million in 2025 to $85-89 million in 2026 for next-gen chips. In comparison, the company has $69 million in cash and $166 million in debt.
Regardless, I think it is a good speculative buy for multibagger gains since FY2025 revenue is projected at $19-50 million, and FY2026 revenue is at $105-140 million. The fundamentals here are far from perfect, but when you compare it to AI startups like SoundHound AI (NASDAQ:SOUN), or BigBear.ai (NYSE:BBAI), the chance of BZAI taking off once it attracts more eyes starts to look much more plausible.
The consensus price target of $10 implies 244.83% upside potential.
Richtech Robotics (NASDAQ:RR) has been much more fortunate. The stock is up 449% in just the past six months. This company makes AI-driven robotic products for the service industry and targets hospitality, healthcare, retail, and food services, all of which are labor-intensive and face labor shortages when the market is tight. In the Trump era, the shortage could get a lot worse, especially if deportations happen en masse. Robots playing a key role in the aforementioned jobs is just a matter of time due to demographic trends.
Richtech Robotics already has agreements to operate 20 Walmart-located restaurants and projects $700,000 to $2 million annual revenue per location. Still, it is a very speculative investment as revenue declined 51.59% to $4.24 million in FY2024, along with negative FCF at $5.79 million. It claims a $230 billion addressable market and already has some physical robotics that work. I believe if it can land a big customer this year, the stock could deliver explosive returns.
Do keep in mind that outstanding shares increased 34.5% in the last quarter. It has $31 million in cash against just $1 million in debt now, so this could also mean less dilution in the future.
PaySign (NASDAQ:PAYS) is a fintech company that specializes in prepaid card programs. It isn’t linked to AI or any trendy sector right now, but I still think it could deliver triple-digit gains this year if all goes well.
Major shareholder Topline Capital has been selling significant portions of their holdings, including a recent sale of $863,044 worth of shares at prices between $3.06 and $3.24 and this has created a bearish environment around the company. The stock is down 41.7% in the past six months.
However, it is still profitable and growth is pretty good here. Revenue increased 23% year-over-year to $15.26 million and net income reached $1.44 million. Gross profit margins improved significantly to 55.5%, up 440 basis points, plus patient affordability revenue surged 219.1% year-over-year. It also has a solid pipeline for future growth.
Full-year adjusted EBITDA is projected at $9-10 million, with zero debt and $31.29 million in unrestricted cash. That leaves a lot of upside potential for a penny stock with a $142 million market cap, especially if it beats estimates like it did in Q3.
The consensus price target of $6.13 implies over 131% upside potential.
