Is Sonos Inc. (SONO) One of the Best Small Cap Tech Stocks to Invest in Now?
Sonos Inc. (NASDAQ:SONO) is one of 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 AI monetization for the software group. While the firm expressed confidence that long-term value will reside in the software layer, it noted that investors may need to remain patient as sector valuations return to historical averages. Furthermore, Jefferies emphasized that more significant growth acceleration is required to mitigate AI disintermediation fears, leading to a more selective investment approach within the sector.
In Q4 2025, Sonos Inc. (NASDAQ:SONO) posted revenue of $288 million, which was a 13% increase year-over-year. While full-year revenue declined by 5% to $1.44 billion, Sonos successfully reduced its annual operating expense run rate by over $100 million and grew 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.
For 2026, CEO Thomas Conrad described the upcoming year as a new chapter focused on a refreshed 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 tariffs, which are expected to impact margins by 300 basis points in Q1 and 400 basis points in Q2. Management is proactively mitigating these costs through strategic pricing and promotions. For Q1 2026, Sonos provided revenue guidance of $510 million to $560 million.
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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 the Asia Pacific.
While we acknowledge the potential of SONO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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