Are small-cap tech stocks a good investment?

Small-cap tech stocks can be a good investment as long as they're part of a diversified portfolio with a long-term buy-and-hold strategy.

How do small-cap tech stocks perform during market volatility?

Small-cap stocks can be hurt by market volatility, and tech stocks can be hurt by market volatility, so a volatile market generally isn't the best of times for small-cap tech stocks. That said, if the fundamentals look good and you're confident in a company's long-term outlook, a volatile market can be a good place to pick up small-cap tech stocks that are in a temporary slump.

Do small-cap tech stocks pay dividends?

It's rare that a small-cap tech stock will pay a dividend, but it's not out of the question. Generally, only mature small-cap tech stocks that have established a solid niche or business will offer a stable, reliable dividend.

Bars

Small-cap tech stocks can come with some risk but also lots of potential advantages. See which small-cap tech companies are poised for long-term growth.

By Frank Bass – Updated Feb 27, 2026 at 3:53 PM EST | Fact-checked by Robin Hartill, CFP

Key Points

Diversify investments by holding five to 10 small-cap tech stocks.
Both tech stocks and small-cap stocks often struggle in times of market volatility.
Small-cap tech stocks are companies in the technology sector with a market cap of $2 billion or less.

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Ticker Information Table
Name and ticker	Market cap	Current price	Industry
PubMatic (NASDAQ:PUBM)	$456.5 million	$10.21	Media
Harmonic (NASDAQ:HLIT)	$1.3 billion	$11.71	Communications Equipment
ACM Research (NASDAQ:ACMR)	$3.4 billion	$52.40	Semiconductors and Semiconductor Equipment
Inseego (NASDAQ:INSG)	$295.8 million	$19.17	Communications Equipment

Data as of May 1, 2026. Showing 4 of 4 tickers.

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1. PubMatic

PubMatic (PUBM +4.40%) is a digital advertising technology firm. Its software provides internet publishers with a means to monetize their work by using artificial intelligence (AI) and automation to sell advertising.

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NASDAQ: PUBM

PubMatic

Today's Change

(4.40%) $0.43

Current Price

$10.21

Key Data Points

Market Cap

$456M

Day's Range

$9.95 - $10.30

52wk Range

$6.15 - $13.88

Volume

22K

Avg Vol

759K

Gross Margin

63.56%

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PubMatic's publisher clients include a diverse group of businesses, including news organizations, e-commerce companies, video game makers, and streaming TV services. The company derives about half of its revenue from internet content formatted for mobile devices.

Mobile represents a growing opportunity for PubMatic, especially outside the U.S., where PubMatic is just beginning to add customers. Digital marketing is another secular growth trend that benefits the company.

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PubMatic completed its initial public offering (IPO) at the end of 2020. The company's sales growth has slowed this year, and share prices have been volatile. Its share prices soared more than 40% to about $9.50 after a better-than-expected third-quarter earnings report in November 2025 but slumped into the $6.50 range in early 2026.

If you believe PubMatic still has upside and can overcome challenges facing the digital advertising industry, it might be a worthwhile addition to your portfolio.

2. Harmonic

Harmonic (HLIT +2.49%) develops and sells video delivery software, products, system solutions, and services through its video and cable access segments. The video-streaming tech company is focused on improving livestreaming capabilities, especially for sports. It boasts some big-name customers that include Comcast (CMCSA +0.85%) and Charter Communications (CHTR +4.83%).

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NASDAQ: HLIT

Harmonic

Today's Change

(2.41%) $0.28

Current Price

$11.71

Key Data Points

Market Cap

$1.3B

Day's Range

$11.36 - $11.81

52wk Range

$7.80 - $12.18

Volume

532K

Avg Vol

1.1M

Gross Margin

51.75%

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In the fourth quarter of 2025, the company beat analyst expectations for the fifth consecutive time, with adjusted earnings per share (EPS) of $0.14 handily surpassing the predicted $.10. However, the company reported a net loss of $54.8 million after including a $55.0 million loss from discontinued operations, a sharp drop from the $38.1 million recorded in Q4 2024.

Harmonic said it attributed record quarterly broadband bookings of $346.9 million to multiyear contracts and posted a 3.5 book-to-bill ratio. It's certainly on the right side of two major secular trends: The continuing rollout of 5G networks and increasing popularity of video streaming are likely to benefit companies that specialize in video delivery.

3. ACM Research

It's not just giant tech companies like Nvidia (NVDA +0.20%), Apple (AAPL +4.15%), and Microsoft (MSFT +1.48%) that are looking at major profits from the AI boom. Several smaller, more-focused companies could ride the wave to big profits, as well. ACM Research (ACMR +1.37%), a manufacturer of semiconductor cleaning equipment, may be a good small-cap bet for investors seeking opportunities from growth stocks.

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NASDAQ: ACMR

ACM Research

Today's Change

(1.37%) $0.71

Current Price

$52.40

Key Data Points

Market Cap

$3.4B

Day's Range

$50.46 - $52.90

52wk Range

$19.09 - $71.65

Volume

283K

Avg Vol

1.3M

Gross Margin

44.39%

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Although much of the company's demand comes from Chinese chip foundries -- a lucrative but potentially unstable market, given current trade tensions between the U.S. and China -- its equipment generally isn't used for advanced chips that are subject to sanctions.

The company reported a 32% year-over-year increase in revenue during the third quarter. But it fell far short of analyst expectations with a non-GAAP (non-generally accepted accounting principles) diluted EPS of $0.36, only a little more than half of the $0.55 projected by analysts.

On a worrisome note, operating expenses continued to climb, rising almost 40% year over year due to higher spending on research and development (R&D), sales and marketing, inventory buildup, and materials and labor.

The company's reliance on the Chinese market may also worry some investors. However, it still stands to benefit from the CHIPS Act of 2022, which provides $52 billion in manufacturing grants and research investments to boost the domestic semiconductor market.

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4. Inseego

Inseego (INSG +5.27%) designs and sells wireless network hardware and provides software for companies to deploy and remotely manage devices connected to their networks. As next-gen 5G technology networks are being built, demand for Inseego's antennas and other infrastructure gear is accelerating.

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NASDAQ: INSG

Inseego

Today's Change

(5.16%) $0.94

Current Price

$19.17

Key Data Points

Market Cap

$296M

Day's Range

$18.07 - $19.94

52wk Range

$6.27 - $20.20

Volume

10K

Avg Vol

171K

Gross Margin

37.70%

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Small-cap tech stocks FAQ

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About the Author

Frank Bass is a contributing Motley Fool stock market analyst and editor covering energy, healthcare, consumer, and financial sectors. Frank has decades of experience in financial journalism, holding reporting and editing roles at The Wall Street Journal, The Associated Press, and Bloomberg. He also currently edits research on the global energy transition. He holds a bachelor’s degree in journalism from Texas Tech University and is a graduate student at the University of Alaska Fairbanks. Fun Facts: Frank has hiked The Long Trail in Vermont from end to end, and currently lives in a semi-dry cabin in Interior Alaska.

TMFEditFool

Frank Bass has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and PubMatic. The Motley Fool recommends Comcast and T-Mobile US. The Motley Fool has a disclosure policy.

Company financials: First, look at the stock like any other potential investment. Is revenue increasing? This is especially important for start-ups that might not yet be turning a profit. Look also at the company's cash flow to be sure that it's a sustainable business. Compare it to peers with metrics like price-to-earnings (P/E) or price-to-sales (P/S) ratios.

Volatility and liquidity: Think about the potential for issues you don't necessarily expect when you put your money in blue chip stocks. Is your risk tolerance sufficient to deal with share price volatility? Is the stock traded at a high enough volume that you could sell it if you wanted? Is the economy in a good enough place to support a small-cap tech stock?

Competition and growth potential: Who are the company's competitors? Does it have an economic moat that it can develop? Is there a market for its product that will allow it to grow? Is it likely to be swallowed up by a competitor or become part of another, larger business?

Your personal situation: Finally, there's your personal investment strategy. Can you be patient enough to buy and hold the stock while it goes through ups and downs? Is purchasing this stock going to make your portfolio more diverse? Have you considered an exchange-traded fund (ETF) that might reduce the risk of betting on a single stock?

Best Small-Cap Tech Stocks for 2026 and How to Invest

Small-cap tech stocks can come with some risk but also lots of potential advantages. See which small-cap tech companies are poised for long-term growth.

Key Points

1. PubMatic

Key Data Points

2. Harmonic

Key Data Points

3. ACM Research

Key Data Points

4. Inseego

Key Data Points

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FAQ

Key Data Points

Key Data Points

1. PubMatic

2. Harmonic

3. ACM Research

4. Inseego

How to invest in small-cap tech stocks

Factors to consider before selecting small-cap tech stocks

Key Data Points