Small caps last week: BuzzFeed deal, bets on AI boom, BNP Paribas small-cap outlook

Media mogul Byron Allen’s deal for control of BuzzFeed, hedge fund Greenlight Capital’s turnaround picks, BNP Paribas Asset Management’s small-cap outlook, and public-market debuts from Fervo Energy and Blackstone Digital Infrastructure Trust were among the biggest stories in the small-cap sector this week, from May 11 through May 15.

Media executive Byron Allen’s family office, Allen Family Digital, has acquired a controlling stake in media platform BuzzFeed for $120 million. Under the terms of the deal, the implied price per share is roughly four times BuzzFeed’s Monday closing price – the day before the transaction was announced. On Tuesday, BuzzFeed shares had doubled by the close, after surging as much as 150% intraday.

BuzzFeed, an “irreverent news website” known for quizzes, memes, and recipe videos, capitalized on the venture-capital boom but never became profitable. Allen plans to develop the platform by bringing it closer to YouTube with the help of AI. “Byron’s vision, operational experience, and long-term commitment to premium content makes him exceptionally well-positioned to lead BuzzFeed and HuffPost into our next phase of growth. And personally, I'm thrilled Byron is taking over ‘The Late Show With Stephen Colbert’s’ time slot, and highly confident that his relationships with talent will bring some incredible stars to the BuzzFeed platform,” current BuzzFeed CEO and founder Jonah Peretti said, outlining the company’s revival plans. Peretti will become CEO of the new BuzzFeed AI division.

The only Wall Street analyst covering the company has a "hold" recommendation on the stock. The target price is $1 per share, about 25% below the current share price.

Strategists at BNP Paribas Asset Management discussed the main reasons behind the rise in small caps in the first quarter in a podcast episode. These included an improving U.S. macro backdrop, expectations for Fed easing, and the AI infrastructure boom, which supported small-cap semiconductor manufacturers, equipment makers, construction companies, and energy names.

Looking ahead, BNP Paribas AM expects support for small caps to continue if tensions in the Middle East keep easing. The firm sees the most attractive opportunities in small- and mid-cap banks, early-cycle industrial companies, cybersecurity, and select software companies capable of adapting to the development of agentic AI.

BNP sees valuation risk in AI infrastructure after the sharp rally, while some software and healthcare companies already look undervalued after the selloff earlier this year.

For more, see this overview of Royce Investment Partners’ small-cap favorites: a portfolio manager at the firm explained which three stocks have earned the long-term confidence of one of its small-cap funds.

Greenlight Capital founder and president David Einhorn, known for investing in companies in difficult situations but with turnaround potential, named five top turnaround stocks. Four of them are small caps.

Acadia Healthcare, an operator of psychiatric hospitals and clinics with a capitalization of nearly $2.4 billion on the Nasdaq, could see its shares nearly double from current levels to $56 apiece if the company succeeds in increasing occupancy rates at newer facilities and negotiating more favorable reimbursement terms with insurers, Einhorn said.

Media company Versant Media, which has a market capitalization of $5.7 billion, can generate significant cash flow, according to Greenlight Capital.

Engineering and construction company Fluor, whose capitalization on the New York Stock Exchange stands at $6.2 billion, is well positioned to benefit from the boom in capital spending on data centers and energy infrastructure, Einhorn argued.

Lingerie retailer Victoria’s Secret, which has a market capitalization of $3.7 billion, has stabilized revenue, though its margins remain under pressure from U.S. tariffs, Einhorn noted. He expects margins to begin recovering by 2027, which could send the company’s shares a third above current levels.

MarketWatch highlighted four small-cap tech stocks that have outperformed Big Tech over the last year. Against the backdrop of the AI boom, investors are increasingly searching for lesser-known names offering significant upside. MarketWatch’s list includes MaxLinear, a chipmaker for data centers; Ichor Holdings, a maker of fluid-delivery systems for chip cooling and semiconductor equipment; Ultra Clean, a developer of components and subsystems for the semiconductor industry; and Cohu, a supplier of semiconductor testing equipment.

While the stocks highlighted by MarketWatch have gained more than 200% over the last 12 months, the largest U.S. tech companies have posted more restrained gains. For example, the Roundhill Magnificent Seven ETF, which tracks shares of the seven largest U.S. tech companies, added 46% over the same period.

Fervo Energy develops next-generation geothermal projects. The company sold 70 million shares at $27 apiece – above both the previously announced and revised pricing range of $25-26 per share – raising $1.89 billion in its IPO.

The company describes itself as a pioneer in enhanced geothermal systems technology for clean-energy generation. In 2025, Microsoft cofounder Bill Gates, impressed after visiting the company’s construction site, wrote on his Gates Notes blog: “Geothermal is one of the most promising ways to deliver clean energy that’s reliable and affordable.” However, the company itself warned in its IPO prospectus that it generates losses every year and may never become profitable because of constant shifts in market conditions.

Blackstone Digital Infrastructure Trust, a REIT focused on acquiring data centers and leasing them to large corporations, raised $1.75 billion in its IPO. The company sold 87.5 million shares at $20 apiece and granted underwriters an option to buy additional shares. If the option is exercised, the offering size will reach $2 billion, while the number of shares outstanding will total 100.6 million.

Analysts see major potential in the sector as demand for AI infrastructure continues to grow. In particular, Blue Owl co-CEO Marc Lipschultz, whose firm competes with Blackstone, has pointed to “unprecedented demand for data center capacity.”