INOD vs. EXLS: Which AI & Data Services Stock Has More Upside?
Innodata Inc. INOD and ExlService Holdings, Inc. EXLS are benefiting from rising enterprise and technology spending on artificial intelligence, data engineering and AI-enabled services. Innodata has greater exposure to frontier AI developers and generative AI model development, while ExlService combines data and AI capabilities with deep domain expertise across insurance, healthcare, banking and other enterprise markets.
Both companies delivered strong growth in the first half of 2026, supported by rising AI adoption. However, Innodata is expanding at a much faster pace, while ExlService offers significantly greater scale, diversification and a lower valuation.
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 Stock
Innodata's growth profile remains its strongest attraction. First-half 2026 revenues surged 56.1% year over year to $182.2 million from $116.7 million. Net income almost doubled to $29.3 million from $15 million, while earnings per share (EPS) increased to 86 cents from 43 cents. Adjusted EBITDA climbed to $50.3 million from $25.9 million, indicating substantial operating leverage alongside rapid revenue expansion.
The company's opportunity is increasingly tied to higher-value AI development work spanning pre-training, post-training, model evaluation and benchmarking. Innodata has also established an early presence in agentic reinforcement learning, securing programs involving personalization of long-horizon agents and reinforcement-learning environments for computer-use tasks. Management believes its research capabilities can help deepen relationships with leading AI labs while opening opportunities in enterprise and federal markets.
Innodata is also broadening its customer base. Its second-largest Big Tech customer scaled rapidly during the first half, while the company added another fast-growing frontier AI lab. Nonetheless, customer concentration remains a meaningful risk, as a few large technology companies still account for a sizable portion of revenues. Project timing and changing AI-development priorities can therefore create volatility.
Management continues to expect at least 40% revenue growth in 2026, with several potential large programs not incorporated into the outlook. Innodata faces competition for data engineering and AI-development spending from larger technology-services companies such as Genpact G.
The Case for ExlService Stock
ExlService offers a larger and more diversified AI-services platform. First-half 2026 revenues increased 14.7% year over year to roughly $1.17 billion. Adjusted operating margin expanded 20 basis points to 20.1%, while adjusted EPS advanced 21.3% to $1.17. The company also generated $90 million of operating cash flow during the period, underscoring its established profitability and cash-generating capacity.
Growth is increasingly being driven by data and AI services. Data and AI-led revenues represented 61% of second-quarter revenues and increased 30.7% in constant currency, reflecting continued migration toward higher-value AI work. ExlService is helping enterprises deploy AI in complex workflows across insurance, healthcare, banking and other regulated industries, where its industry knowledge provides an important differentiator.
Healthcare and Life Sciences, Insurance and International Growth Markets all recorded double-digit growth during the first half. EXL is also expanding its AI ecosystem through relationships with OpenAI, Anthropic, Databricks, Snowflake and NVIDIA. The iMerit acquisition is intended to deepen EXL's foundation-model expertise and strengthen its position in enterprise AI.
The principal drawback is that EXLS' underlying growth rate remains well below Innodata's. Its Digital Operations business is also undergoing a transition as more work shifts toward AI-led solutions. Integration of iMerit adds another execution consideration. EXL competes with global IT and data-services providers such as Cognizant Technology Solutions CTSH.
Share Momentum Favors Innodata
Neither stock has outperformed over the full one-year period. Shares of both INOD and EXLS have plunged 13.3% and 21.4%, respectively, against the 16.9% gain for the Zacks S&P 500 Composite.
INOD vs. EXLS Price Performance (1-Year)
Image Source: Zacks Investment Research
The six-month comparison paints a different picture. INOD stock has surged 93.8%, sharply outperforming EXLS' 13.2% gain and the S&P 500's 22.1% increase. This reflects stronger enthusiasm around Innodata's AI growth trajectory, although the sharp appreciation also raises expectations for continued execution.
INOD vs. EXLS Price Performance (6-Month)
Image Source: Zacks Investment Research
EXLS Offers a Much Cheaper Entry Point
Valuation clearly favors ExlService. On a forward 12-month P/E basis, INOD trades at 43.31X compared with only 13.71X for EXLS.
INOD vs. EXLS Valuation (P/E F12M)
Image Source: Zacks Investment Research
Innodata's premium reflects its substantially faster expected growth but leaves less room for execution disappointments. EXLS' lower multiple provides a greater valuation cushion while still offering exposure to accelerating enterprise AI adoption.
Estimate Revisions Point Upward
Innodata's earnings outlook has strengthened. Over the past 60 days, the Zacks Consensus Estimate for 2026 EPS increased to $1.18, while the 2027 estimate edged up to $1.67, as shown below. The consensus estimate projects 42.1% revenue growth in 2026 and 28.1% growth in 2027, with EPS expected to rise 28.3% and 41.7%, respectively.
INOD EPS Estimate Revision Trend
Image Source: Zacks Investment Research
For EXLS, the 2026 EPS estimate increased to $2.29 and the 2027 estimate rose to $2.60, as shown below. Revenues are expected to grow 15.5% in 2026 and 12.1% in 2027, while 2027 EPS is projected to increase 13.6%.
EXLS EPS Estimate Revision Trend
Image Source: Zacks Investment Research
Which Stock Has More Upside?
Both stocks currently carry a Zacks Rank #3 (Hold). INOD appears to offer greater upside potential, although it comes with considerably higher valuation and customer-concentration risk. Its 56% first-half revenue growth, nearly doubled adjusted EBITDA, expanding frontier-AI relationships and stronger long-term consensus growth provide the more aggressive growth setup. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EXLS presents a more balanced profile, supported by diversified industry exposure, consistent profitability, strong enterprise AI positioning and a much cheaper valuation. However, for investors focused primarily on growth potential, Innodata's faster operating momentum and stronger expected revenue and earnings expansion give INOD the edge over EXLS at present.
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Innodata Inc (INOD) : Free Stock Analysis Report
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Genpact Limited (G) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
