Innodata upgraded to Buy after strong Q2 revenue and margin growth, driven by AI and client diversification.

Innodata's stock was upgraded to Buy following a strong Q2 2026 performance, with revenue up 58% to $92.1 million and adjusted EBITDA rising 92%. The company's gross margin reached 49%, showing improved operational leverage. While client concentration remains high with two clients accounting for 71% of revenue, diversification efforts and AI-driven growth support a positive outlook. Trading at 45x 2026 earnings and 32x 2027 earnings, Innodata's shift toward proprietary AI datasets and expected 20%+ growth could justify higher valuation multiples.