We recently published a list of Top 11 Small Cap Stocks to Buy with Biggest Upside Potential. In this article, we are going to take a look at where IDEAYA Biosciences, Inc. (NASDAQ:IDYA) stands against other top small cap stocks to buy with biggest upside potential.

On April 24, Jill Carey Hall, BofA Securities head of U.S. small/mid-cap strategy, appeared on ‘Closing Bell’ to talk about the impact of tariffs on small caps. She also discussed the outlook for the category, saying that the earnings backdrop is essential. When we look back a year ago, investors were excited about small caps, as the earnings were recovering and the market was coming out of the 2023 earnings recession. Everyone expected that these stocks would see double-digit earnings growth by mid-last year, outpacing large caps. That got pushed out for over a year, and now the sector has sold off a lot.

While we have gotten some potential good news on tariffs, there is still a lot of uncertainty, and we are in a backdrop where earnings revisions have still been negative. She opined that she would feel more comfortable if we were in a backdrop where there was confidence in earnings recovery because last earnings season, the commentary was a lot more negative from small-cap companies than large-cap companies. So far, this earnings season is still early for small caps, but guidance in both large and small has been weak.

READ ALSO: Recession Resistant Investing: 10 Best Grocery Stocks To Buy Now and 10 Best Stocks That Will Always Grow.

What Should You Invest in This Year?

Hall said that the sector would see a much better picture if earnings revisions turned around with higher confidence, and not only the tariffs were better than expected but also the economic backdrop was better. However, we are also in a place where economists think the Fed will stay on hold this year, and the Russell has been very sensitive to Fed expectations. Her outlook for small caps thus points towards a more credit-sensitive environment highly tethered to Fed expectations, with no anticipation of a rate cut this year. She also highlighted that looking at corporate commentary as small-cap reporting kicks off is important.

Not all small caps are created equal, even when some people consider them to be so. Hall opined that this is definitely a year where you want to be selective in small caps, focusing on stocks with strong margins amid tariff uncertainty. She favored high-quality domestic stocks, steering clear of tariff and refinancing risks and focusing on stocks with positive revisions in this broad backdrop of negative revisions. There are groups of stocks that are more sensitive to tariffs, just as there are groups that are more global and domestic. Similarly, some groups are more levered with higher refinancing risks within small caps if the rate stays higher and credit spreads stay elevated.

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Therefore, she reasoned that she would stick with higher-quality stocks that are more profitable and have strong operating margins. Stocks with these characteristics have been some of the top performers within the industry amid tariff risks. From a sector perspective, if investors want to be more defensive, utilities screen well across the work, both in small and large caps.

There will thus be opportunities in the segment, according to Hall, but one needs to be selective. She also expressed positive sentiments for mid-caps, which have been one of the best performers in the sector this year. They have seen much better revision trends, cleaner balance sheets, and fewer risks from potential earnings hits from tariffs than small caps because the latter have thinner margins and could see a greater hit.

Our Methodology

We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 small cap stocks and chose the top 11 with the biggest analyst upside potential as of May 2, 2025. We also included the number of hedge fund holders as of Q4 2024, which we sourced from Insider Monkey’s database. The list is presented in ascending order of stocks’ upside potential.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).IDEAYA Biosciences (IDYA) Partners with ATTMOS for AI-Driven Drug Discovery Platform

A scientist in a laboratory conducting tests on a molecular diagnostic sample.

IDEAYA Biosciences, Inc. (NASDAQ:IDYA)

Market Cap: $1.79 billion

Analyst Upside: 165.77%

Number of Hedge Fund Holders: 34

IDEAYA Biosciences, Inc. (NASDAQ:IDYA) develops oncology-focused precision medicine, focusing on targeted therapeutics for patients selected using molecular diagnostics. The company’s product candidate is IDE196, a protein kinase C inhibitor that targets genetically defined cancers with GNAQ or GNA11 gene mutations.

On April 15, analyst Jeet Mukherjee from BTIG maintained a Buy rating on IDEAYA Biosciences, Inc. (NASDAQ:IDYA), setting a $62.00 price target and highlighting its promising future prospects. The analyst reasoned that the company recently attained a significant milestone by aligning with the FDA on the pivotal endpoints for its Phase 3 trial of darovasertib in treating neoadjuvant uveal melanoma. The alignment covers key endpoints critical for complete approval, such as vision and eye preservation.

The analyst also highlighted that IDEAYA Biosciences, Inc. (NASDAQ:IDYA) is poised for several significant data releases that could act as potential catalysts for the stock, including the topline data from a Phase 2/3 trial in metastatic uveal melanoma. This also includes updates from other ongoing studies, as Mukherjee expects them to be potential factors that could upgrade the company’s valuation. IDEAYA Biosciences, Inc. (NASDAQ:IDYA) is thus an attractive buy for the analyst, with the strategic design of the Phase 3 study, complete with its interim analysis plans and detailed cohort structure, further supporting the potential for positive outcomes.

Overall, IDYA ranks 8th on our list of top small cap stocks to buy with biggest upside potential. While we acknowledge the potential for IDYA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than IDYA but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

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