These companies are all expected to show very rapid revenue growth through 2028
These companies are all projected to increase revenue at a rapid pace through at least 2028. And analysts see very high upside for the stocks over the next year.
Microcap stocks as a group have been outperforming large-cap stocks by a wide margin so far this year, but there are still plenty of bargains to be had.
There are also some potential opportunities in the software group, which had been crushed earlier this year due to investors' fears around artificial intelligence. The shares have started to generate some interest from investors over the past several trading sessions in favor of the previously loved semiconductor stocks that have tumbled of late.
For July through Wednesday, the S&P 500 software industry group returned 2.8%, which may not seem to be an impressive performance, but this followed a 19.6% drop during the first half of the year. Meanwhile, the iShares Semiconductor exchange-traded fund SOXX has also reversed course, with a shocking July decline of 27.4%, after more than doubling during the first half of the year. (These are all total-return figures including reinvested dividends, as calculated by FactSet.)
On Wednesday we screened software stocks in the S&P Composite 1500 Index XX:SP1500 (which includes large-cap, midcap and small-cap stocks) to highlight six that appear primed to withstand the threat from AI, based on sales-growth projections through 2028.
So now the time seems right to look further into the software industry by screening microcap stocks.
So far this year, the Russell Microcap Index XX:RMIC has performed very well, returning 17.9%, way ahead of the S&P 500 SPX, which has returned 7.6%. But the microcap index has had a tough July, pulling back 7%, while the S&P 500 has declined 2.4%. We recently did a broad screen of microcap stocks to highlight eight companies expected to show the strongest sales growth over the next two years.
The Russell Microcap Index is made up of the smallest 1,000 stocks in the Russell 2000 Index RUT by market capitalization, plus additional companies among the smaller names in the Russell 2000. There were 1,357 stocks in the Russell Microcap Index as of June 30, according to FTSE Russell's most recently updated fact sheet for the index. The Russell indexes are reconstituted twice annually, in December and June. The iShares Micro-Cap ETF IWC is an exchange-traded fund that tracks the Russell Microcap Index.
Companies in the Russell Microcap Index had a median market cap of $279 million as of June 30, while those in the Russell 2000 had a median market cap of $1.18 billion, according to FTSE Russell.
Microcap software stock screen
There are 73 software companies in the Russell Microcap Index, according to FactSet. We narrowed the group down to 27 companies, based on analyst coverage and available consensus revenue estimates through 2028.
A microcap company's baseline sales estimate for 2026 might be very low. So the following table also shows the projected compound annual growth rate for sales through 2028, as well as the consensus estimate for each of the three years' sales and for the companies' market caps. There is more information in the second table. The sales estimates and market caps are in millions.
Here are the 12 microcap software companies expected to achieve sales CAGR of at least 12% from calendar 2026 through 2028:
Company Two-year est. sales CAGR through 2028 Est. 2026 sales Est. 2027 sales Est. 2028 sales Market cap AEye 261.1% $3 $21 $43 $47 Red Cat Holdings 34.6% $152 $218 $276 $1,030 BlackSky Technology 34.5% $137 $182 $248 $843 FTC Solar 29.1% $143 $201 $238 $42 Viant Technology 18.7% $257 $310 $362 $229 MNTN 17.4% $352 $417 $485 $583 Weave Communications 14.9% $277 $316 $366 $553 Silvaco Group 14.9% $72 $82 $96 $226 CS Disco 12.6% $175 $194 $222 $271 Blend Labs 12.2% $132 $147 $166 $432 Xperi 12.1% $457 $490 $575 $364 Oddity Tech 12.1% $625 $716 $785 $518 Source: FactSet
For perspective, the S&P Small Cap 600 Index SML is projected to increase sales at a CAGR of 7.7% from 2026 through 2028, according to FactSet's analysis of consensus estimates.
This second table includes price/sales ratios based on market caps as of the close on July 29, and on the consensus 2026 and 2028 sales estimates. It also includes a summary of ratings and consensus stock-price targets.
Company Price/ 2026 sales estimate Price/ 2028 sales estimate Share buy ratings July 29 price Cons. price target Implied 12-month upside potential
AEye 14.46 1.11 100% $1.02 $4.39 330%
Red Cat Holdings 6.76 3.73 100% $6.77 $21.57 219%
BlackSky Technology 6.16 3.40 71% $20.61 $39.06 90%
FTC Solar 0.29 0.18 75% $2.60 $10.25 294%
Viant Technology 0.89 0.63 100% $11.46 $17.77 55%
MNTN 1.66 1.20 90% $9.56 $20.00 109%
Weave Communications 2.00 1.51 100% $6.95 $8.75 26%
Silvaco Group 3.13 2.37 100% $6.91 $15.17 119%
CS Disco 1.54 1.22 67% $4.22 $6.67 58%
Blend Labs 3.29 2.61 83% $1.81 $3.58 98%
Xperi 0.80 0.63 100% $7.55 $11.60 54%
Oddity Tech 0.83 0.66 0% $14.97 $11.07 -26%
Source: FactSet
Some of these forward price/sales ratios are quite high or low when compared with those of the S&P Small Cap 600 Index, which trades at a price/sales ratio of 1.23 based on the weighted consensus 2026 revenue estimate, and a ratio of 1.06 based on the 2028 revenue estimate, according to FactSet.
The second table also includes the percentage of shares with buy or equivalent ratings among the analysts polled by FactSet. All the other ratings are neutral, except for one company. Among the 11 analysts covering Oddity Tech $(ODD)$, there are no buy ratings, seven neutral ratings and four sell or equivalent ratings.
Sell-side analysts tend to set 12-month price targets. Based on the consensus targets, the 11 stocks on the list with majority buy ratings are expected to return at least 26% over the next year, with five of them - AEye $(LIDR)$, Red Cat (RCAT), FTC Solar (FTCI), MNTN $(MNTN)$ and Silvaco (SVCO) - expected to show triple-digit percentage gains.
Any list of microcap stocks is speculative. You should do your own research to form your own opinions about these stocks before considering what might be a risky long-term investment.
One way to begin your research is to click on the tickers for more information about each company. On the MarketWatch quote page, there are many tabs with additional information, including the Analyst Estimates tab, which provides a deeper breakdown of estimates and targets.
For more on the companies' own outlooks, you can search in the Securities and Exchange Commission's Edgar database for filings. Search by ticker, and on the right, you will see a plus symbol to the left of "8-K (Current Reports)." If you expand that list, earnings press releases are clearly marked. Then if you read the most recent press release and maybe go back and read a few prior quarterly earnings announcements, you can get a better feel for a company's business strategy, its results and how its management team expects its financial performance to change over the coming quarters or even years.
MW 5 microcap software stocks expected to soar by triple digits as the companies' sales pop
By Philip van Doorn
These companies are all expected to show very rapid revenue growth through 2028
These companies are all projected to increase revenue at a rapid pace through at least 2028. And analysts see very high upside for the stocks over the next year.
Microcap stocks as a group have been outperforming large-cap stocks by a wide margin so far this year, but there are still plenty of bargains to be had.
There are also some potential opportunities in the software group, which had been crushed earlier this year due to investors' fears around artificial intelligence. The shares have started to generate some interest from investors over the past several trading sessions in favor of the previously loved semiconductor stocks that have tumbled of late.
For July through Wednesday, the S&P 500 software industry group returned 2.8%, which may not seem to be an impressive performance, but this followed a 19.6% drop during the first half of the year. Meanwhile, the iShares Semiconductor exchange-traded fund SOXX has also reversed course, with a shocking July decline of 27.4%, after more than doubling during the first half of the year. (These are all total-return figures including reinvested dividends, as calculated by FactSet.)
On Wednesday we screened software stocks in the S&P Composite 1500 Index XX:SP1500 (which includes large-cap, midcap and small-cap stocks) to highlight six that appear primed to withstand the threat from AI, based on sales-growth projections through 2028.
So now the time seems right to look further into the software industry by screening microcap stocks.
So far this year, the Russell Microcap Index XX:RMIC has performed very well, returning 17.9%, way ahead of the S&P 500 SPX, which has returned 7.6%. But the microcap index has had a tough July, pulling back 7%, while the S&P 500 has declined 2.4%. We recently did a broad screen of microcap stocks to highlight eight companies expected to show the strongest sales growth over the next two years.
The Russell Microcap Index is made up of the smallest 1,000 stocks in the Russell 2000 Index RUT by market capitalization, plus additional companies among the smaller names in the Russell 2000. There were 1,357 stocks in the Russell Microcap Index as of June 30, according to FTSE Russell's most recently updated fact sheet for the index. The Russell indexes are reconstituted twice annually, in December and June. The iShares Micro-Cap ETF IWC is an exchange-traded fund that tracks the Russell Microcap Index.
Companies in the Russell Microcap Index had a median market cap of $279 million as of June 30, while those in the Russell 2000 had a median market cap of $1.18 billion, according to FTSE Russell.
Microcap software stock screen
There are 73 software companies in the Russell Microcap Index, according to FactSet. We narrowed the group down to 27 companies, based on analyst coverage and available consensus revenue estimates through 2028.
A microcap company's baseline sales estimate for 2026 might be very low. So the following table also shows the projected compound annual growth rate for sales through 2028, as well as the consensus estimate for each of the three years' sales and for the companies' market caps. There is more information in the second table. The sales estimates and market caps are in millions.
Here are the 12 microcap software companies expected to achieve sales CAGR of at least 12% from calendar 2026 through 2028:
Company Two-year est. sales CAGR through 2028 Est. 2026 sales Est. 2027 sales Est. 2028 sales Market cap
AEye 261.1% $3 $21 $43 $47
Red Cat Holdings 34.6% $152 $218 $276 $1,030
BlackSky Technology 34.5% $137 $182 $248 $843
FTC Solar 29.1% $143 $201 $238 $42
Viant Technology 18.7% $257 $310 $362 $229
MNTN 17.4% $352 $417 $485 $583
Weave Communications 14.9% $277 $316 $366 $553
Silvaco Group 14.9% $72 $82 $96 $226
CS Disco 12.6% $175 $194 $222 $271
Blend Labs 12.2% $132 $147 $166 $432
Xperi 12.1% $457 $490 $575 $364
Oddity Tech 12.1% $625 $716 $785 $518
Source: FactSet
For perspective, the S&P Small Cap 600 Index SML is projected to increase sales at a CAGR of 7.7% from 2026 through 2028, according to FactSet's analysis of consensus estimates.
This second table includes price/sales ratios based on market caps as of the close on July 29, and on the consensus 2026 and 2028 sales estimates. It also includes a summary of ratings and consensus stock-price targets.
Company Price/ 2026 sales estimate Price/ 2028 sales estimate Share buy ratings July 29 price Cons. price target Implied 12-month upside potential
AEye 14.46 1.11 100% $1.02 $4.39 330%
Red Cat Holdings 6.76 3.73 100% $6.77 $21.57 219%
BlackSky Technology 6.16 3.40 71% $20.61 $39.06 90%
FTC Solar 0.29 0.18 75% $2.60 $10.25 294%
Viant Technology 0.89 0.63 100% $11.46 $17.77 55%
MNTN 1.66 1.20 90% $9.56 $20.00 109%
Weave Communications 2.00 1.51 100% $6.95 $8.75 26%
Silvaco Group 3.13 2.37 100% $6.91 $15.17 119%
CS Disco 1.54 1.22 67% $4.22 $6.67 58%
Blend Labs 3.29 2.61 83% $1.81 $3.58 98%
Xperi 0.80 0.63 100% $7.55 $11.60 54%
Oddity Tech 0.83 0.66 0% $14.97 $11.07 -26%
Source: FactSet
Some of these forward price/sales ratios are quite high or low when compared with those of the S&P Small Cap 600 Index, which trades at a price/sales ratio of 1.23 based on the weighted consensus 2026 revenue estimate, and a ratio of 1.06 based on the 2028 revenue estimate, according to FactSet.
The second table also includes the percentage of shares with buy or equivalent ratings among the analysts polled by FactSet. All the other ratings are neutral, except for one company. Among the 11 analysts covering Oddity Tech (ODD), there are no buy ratings, seven neutral ratings and four sell or equivalent ratings.
Sell-side analysts tend to set 12-month price targets. Based on the consensus targets, the 11 stocks on the list with majority buy ratings are expected to return at least 26% over the next year, with five of them - AEye (LIDR), Red Cat (RCAT), FTC Solar (FTCI), MNTN (MNTN) and Silvaco (SVCO) - expected to show triple-digit percentage gains.
Any list of microcap stocks is speculative. You should do your own research to form your own opinions about these stocks before considering what might be a risky long-term investment.
One way to begin your research is to click on the tickers for more information about each company. On the MarketWatch quote page, there are many tabs with additional information, including the Analyst Estimates tab, which provides a deeper breakdown of estimates and targets.
For more on the companies' own outlooks, you can search in the Securities and Exchange Commission's Edgar database for filings. Search by ticker, and on the right, you will see a plus symbol to the left of "8-K (Current Reports)." If you expand that list, earnings press releases are clearly marked. Then if you read the most recent press release and maybe go back and read a few prior quarterly earnings announcements, you can get a better feel for a company's business strategy, its results and how its management team expects its financial performance to change over the coming quarters or even years.
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