Innodata vs. EXL: Which Data Services Stock Is a Buy Now?

The growth of enterprise AI adoption continues to accelerate investor interest in data services and data engineering companies. Two names that stand out in this space for different reasons are Innodata Inc. INOD and ExlService Holdings, Inc. EXLS or EXL. Both companies combine deep experience in data transformation with expanding capabilities in artificial intelligence, and both have positioned themselves to benefit from the increasing demand for enterprise data modernization and AI-driven operating models.Despite the thematic overlap, their business models diverge. Innodata has positioned itself at the foundational layer of the AI ecosystem, supporting Big Tech, hyperscalers and sovereign AI programs through high-quality data, pretraining data capabilities and AI infrastructure. EXL is more diversified across insurance, healthcare and financial services and has built a full-scale enterprise digital and AI workflow automation business. With the AI investment cycle intensifying, comparing these companies is timely. Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.The Case for Innodata StockInnodata is one of the most direct beneficiaries of hyperscaler spending and AI infrastructure development. The company reported a record-setting third quarter, generating revenues of $62.6 million, up 20% year over year, and reiterated full-year guidance of 45% or more organic revenue growth for 2025. Management highlighted increasing Big Tech expansion, emphasizing new and existing deal flow, stronger pipeline visibility and several new initiatives that underpin 2026 growth. One of the most important drivers is the pretraining data business, which has already produced signed or expected-to-be-signed deals worth $68 million, reflecting rising demand from large AI labs and hyperscalers.Another new trajectory is the federal and government AI market. The company launched Innodata Federal with an initial project worth an estimated $25 million in 2026, and expects additional large engagements with defense and intelligence agencies. The investor presentation reinforces this momentum, highlighting the company’s positioning as a “picks and shovels” beneficiary of the generative AI revolution, with contracts already spanning five of the Magnificent Seven technology giants.Innodata also continues to deepen enterprise AI initiatives across generative AI workflows, agentic AI, sovereign AI and foundational data platforms. While customer concentration remains a risk, much of this concentration is with customers aggressively scaling AI spending, which creates an unusual combination of near-term revenue visibility and long-term pipeline optionality. The challenge for the company is primarily on execution and scaling delivery against rapidly growing demand, but the strategic opportunity allows for multiyear expansion.The Case for ExlService StockEXL continues to execute one of the most stable and predictable growth strategies in the data services industry. The company posted another strong third quarter, with revenues of $529.6 million, up 12.2% year over year, driven by solid performance in its data and AI-led revenues, and 21.6% growth in the healthcare and life sciences segment. Unlike Innodata, EXL remains a diversified operator across insurance, healthcare and financial services, and more than 75% of its revenues are recurring or annuity-like, providing stability and revenue visibility.In the third quarter, EXL unveiled EXLdata.ai, a new agentic AI-native data platform that reduces the time required to make enterprise data AI-ready. The platform integrates across Databricks, Snowflake and hyperscaler ecosystems, and demonstrates EXL’s continued push toward deeper data and AI transformation. The company continues to gain traction with new enterprise deployments, industry recognitions and AI-led workflow enhancements. The competitive position remains strong, and its full-year guidance was raised again due to growing client demand and sales momentum.The challenge for EXL is not growth, but growth relative to the broader AI infrastructure opportunity. Its business models scale more incrementally and depend more heavily on industry adoption cycles rather than hyperscaler AI spending. While this increases predictability, it also limits the ability to capture the fastest-growing parts of the AI stack.Share Price Performance: INOD vs. EXLSOver the past three months, INOD stock has risen 42.6%, significantly outperforming both the broader Zacks Computer & Technology sector, which gained 10.2%, and the S&P 500, which rose 5.8%. EXLS has declined 9.8% over the same period and has lagged both benchmarks. The divergence reflects the market’s preference for companies positioned directly in the AI infrastructure stack and hyperscaler spending rather than incremental enterprise AI adoption.INOD & EXLS PerformanceImage Source: Zacks Investment ResearchINOD & EXLS: ValuationInnodata trades at a premium valuation because the market is pricing in its higher growth trajectory. The stock trades at 51.4X forward 12-month earnings. EXL trades at 18.37X forward 12-month earnings, below both Innodata and the broader Zacks Computer & Technology sector, which is at 28.27X. The valuation gap highlights the different growth expectations and the higher-risk, higher-reward positioning of Innodata.Image Source: Zacks Investment ResearchEPS Estimate Trend of INOD & EXLSAnalyst revisions provide further clarity on growth expectations. The Zacks Consensus Estimate for Innodata’s 2025 EPS has increased to 89 cents from 78 cents over the past 30 days. Revenues are projected to grow 45.6% in 2025 and 24.1% in 2026.INOD StockImage Source: Zacks Investment ResearchMeanwhile, the Zacks Consensus Estimate for EXL’s 2025 EPS has increased to $1.92 from $1.90, with expected revenue growth of 13% in 2025 and 11.4% in 2026. Both companies experienced positive estimate revisions, but Innodata’s revenue runway is considerably steeper.EXLS StockImage Source: Zacks Investment ResearchINOD or EXLS: Which Stock Has More Upside Potential?Both companies are positioned to benefit from the same secular trend — data and AI transformation — although they participate in the stack at different levels. EXL delivers a predictable and diversified model with recurring enterprise demand across major industries. It remains a proven compounder and a stable operator and has raised guidance on sustainable demand. However, Innodata stands at the heart of the fastest-growing area in AI: foundational AI data infrastructure, pretraining data and hyperscaler demand. The combination of record revenue growth, Big Tech expansion, federal AI traction and sovereign AI opportunities gives Innodata a more substantial near-term growth catalyst profile.Given the accelerating revenue cadence, stronger pipeline visibility and exposure to the highest-growth end markets, Innodata appears to offer greater upside potential at this stage. Innodata currently sports a Zacks Rank #1 (Strong Buy), while EXL carries a Zacks Rank #3 (Hold). EXL remains an attractive long-term compounder, but Innodata is better positioned for the immediate AI-driven growth cycle. You can see the complete list of today’s Zacks #1 Rank stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ExlService Holdings, Inc. (EXLS): Free Stock Analysis Report Innodata Inc. (INOD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks