With just a day of trading left, Wall Street is set to close in positive territory in the first half of 2026. Similar to the past three years, U.S. stock markets are being driven by soaring artificial intelligence (AI) trade this year too.
However, a fundamental change this year is that the small and mid-cap stocks have significantly outperformed the large-cap entities. Year to date, the large-cap centric S&P 500, Dow and Nasdaq Composite have risen 8.5%, 7.9% and 11.1%, respectively.
In the same time period, the mid-cap-specific S&P 400 Index has advanced 14.3%. Moreover, the small-cap benchmarks — the Russell 2000 and the S&P 600 indexes — have rallied 20% and 21%, respectively.
Here, we have identified five small and mid-cap AI stocks that have provided triple-digit returns in first-half 2026 for investment. Their current favorable Zacks Rank indicates more firepower to be unleashed in the second half. The companies are: Bandwidth Inc. BAND, Arteris Inc. AIP, Penguin Solutions Inc. PENG, A10 Networks Inc. ATEN and Veeco Instruments Inc. VECO.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Bandwidth Inc.
Zacks Rank #1 (Strong Buy) Bandwidth operates as a Communications Platform-as-a-Service provider, offering avant-garde software application programming interfaces for voice and messaging services. BAND is the only API platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
BAND’s “Bandwidth Build” platform is a revolutionary conversational AI platform that enables AI agents and developers to autonomously provision, configure, and launch communications services using self-serve APIs, SDKs, and voice capabilities, in minutes.
Bandwidth has an expected revenue and earnings growth rate of 18.3% and 25.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 5.3% over the last 60 days.
Arteris Inc.
Zacks Rank #2 (Buy) Arteris is a provider of System IP consisting of NoC interconnect and other IP as well as IP Deployment software which accelerates the creation of SoC-type semiconductors. AIP’s hardware-level architecture is crucial for accelerating data-intensive AI and Advanced Driver Assistance Systems workloads. AIP’s technology is in high demand for automotive and Edge AI infrastructure.
Arteris has an expected revenue and earnings growth rate of 34.4% and 72.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 62.5% over the last 60 days.
Penguin Solutions Inc.
Penguin Solutions designs, builds, deploys and manages enterprise solutions worldwide. PENG offers hardware, software, and services focusing on technical computing for core and cloud environments through high-performance computing and AI solutions. Currently, Penguin Solutions has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
PENG also provides Penguin Solutions OriginAI, an AI infrastructure solution for customers deploying GPUs at scale. PENG also offers other integrated memory solutions to networking and telecom, data analytics, AI, and ML (machine learning) under the SMART Modular Technologies brand.
Penguin Solutions has an expected revenue and earnings growth rate of 25% and 37%, respectively, for the next year (ending August 2027). The Zacks Consensus Estimate for next year’s earnings has improved 26% over the last 30 days.
A10 Networks Inc.
Zacks Rank #2 A10 Networks provides software-based application networking solutions. ATEN’s solutions enable enterprises, service providers, Web giants, and government organizations to enhance, secure, and optimize the performance of their data center applications and networks.
ATEN delivers its solutions on optimized hardware appliances and as virtual appliances across its Thunder Series and AX Series product families. The A10 Thunder ADC is necessary to ensure high-performance, low-latency connectivity required by modern AI-ready data centers.
ATEN acquired TrojAI, a specialist in safeguarding, testing, and governing AI applications and agentic workflows. The acquisition strengthened ATEN’s capability to protect models and testing frameworks from adversarial AI threats.
A10 Networks has an expected revenue and earnings growth rate of 11.9% and 16.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.9% over the last 60 days.
Veeco Instruments Inc.
Zacks Rank #1 Veeco Instruments is engaged in the design, development, manufacture and support of thin film process equipment, primarily sold to make electronic devices. VECO is a key developer of AI hardware, providing critical tools used to produce advanced packaging, silicon photonics, and compound semiconductors.
Veeco Instruments has an expected revenue and earnings growth rate of 20.2% and 24.1%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has remained the same over the last 30 days.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Veeco Instruments Inc. (VECO): Free Stock Analysis Report
A10 Networks, Inc. (ATEN): Free Stock Analysis Report
Bandwidth Inc. (BAND): Free Stock Analysis Report
Arteris, Inc. (AIP): Free Stock Analysis Report
Penguin Solutions, Inc. (PENG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).