Investment Review №354. AI lends a hand to the bulls

Small-Cap Segment Overview

Small-caps

SKYX Platforms (SKYX) develops modular smart-home and lighting solutions. Its merger with Deako broadens access to major U.S. homebuilders and unifies ceiling- and wall-mounted systems into a single offering. Growth should be driven by cross-selling across the combined customer base and higher revenue per build, with additional upside from potential cost cuts and operational efficiencies. Key risks include integration complexity, exposure to the U.S. housing market, higher leverage, and shareholder dilution.

The 12-month price target is $2.50.

 

AMREP Corporation (AXR) is a land developer in New Mexico that monetizes its land bank through lot sales and homebuilding. The investment case rests on undervalued land, a net cash position, and potential margin uplift from building on its own lots. Q1, however, saw minimal land sales and lower home sales. Management guides to a significant decline in developed-lot revenue in FY 2027. Key risks include permitting and infrastructure delays, elevated mortgage rates, weaker housing demand, and a concentrated land-purchaser base.

The 12-month price target is $22.

 

Lightwave Logic (LWLG) develops materials for optical components that accelerate data transmission in data centers and AI infrastructure. The investment appeal lies in its potential to reduce power consumption while increasing data rates in optical chips. The key catalyst is the transition from R&D to commercialization: the company is integrating its materials into partners’ manufacturing platforms and targets the start of mass shipments in H2 2027. Its licensing-and-royalty model should keep capital intensity low. Principal risks include technology qualification, minimal current revenue, reliance on a limited number of programs, and intense competition.

The 12-month price target is $10.

 

Aeluma (ALMU) develops optical components enabling high-speed data transmission for AI infrastructure and telecom networks. The investment case centers on the potential commercialization of photodetectors and lasers for data centers. Near-term growth hinges on securing development contracts with major customers and subsequently scaling production. The company has ample cash to fund equipment purchases and team expansion. However, revenue over the next year will likely depend primarily on government contracts, with commercial agreements still under negotiation. Key risks include the lack of revenue guidance, rising costs and capex, and potential shareholder dilution.

The 12-month price target is $25.

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S&P Global ratings – “BB-”, outlook “Positive”.

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