Sonos Inc. (NASDAQ:I AM) is one of the the best small-cap tech stocks to invest in now. On January 5, Jefferies raised its price target for Sonos to $21 from $19 with a buy rating, characterizing 2026 as a year of gradual monetization of AI for the software group. While the company expressed confidence that long-term value will reside in the software layer, it noted that investors may need to be patient as industry valuations return to historical averages. In addition, Jefferies stressed that more significant growth acceleration is required to mitigate fears of AI disintermediation, resulting in a more selective investment approach within the sector.

In the fourth quarter of 2025, Sonos Inc. (NASDAQ:SONO) reported revenue of $288 million, up 13% year-over-year. While full-year revenue declined 5% to $1.44 billion, Sonos successfully reduced its annual operating expense run rate by more than $100 million and increased its non-GAAP EPS by 31% to $0.64. Financial discipline was also evident in inventory management, which saw a 26% year-over-year reduction to $171 million.

Looking ahead to 2026, CEO Thomas Conrad described the coming year as a new chapter focused on an updated strategy that emphasizes the Sonos platform as a cohesive system for third-party and first-party AI experiences. Despite the positive momentum, the company faces headwinds from the tariffs, which are expected to hit margins by 300 basis points in the first quarter and 400 basis points in the second quarter. Management is proactively mitigating these costs through strategic pricing and promotions. For the first quarter of 2026, Sonos provided revenue guidance of $510 million to $560 million.

Copyright: bugphai / 123RF Stock Photo

Sonos Inc. (NASDAQ:SONO), together with its subsidiaries, designs, develops, manufactures and sells audio products and services in the Americas, Europe, the Middle East, Africa and Asia Pacific.

While we recognize SONO’s potential as an investment, we believe some AI stocks offer greater upside potential and less downside risk. If you’re looking for an extremely undervalued AI stock that will also benefit significantly from Trump-era tariffs and the onshoring trend, check out our free report on the best short term AI stock.

READ THE FOLLOWING: 30 stocks that should double in 3 years i 11 Hidden AI Stocks to Buy Right Now.

Disclosure: no. This article is originally published in Monkey Insider.