Place the baby potatoes in a large pot and cover them with cold water. Add a generous pinch of salt. Bring the water to a boil and cook the potatoes for about 12 to 15 minutes, or until they are fork-tender but not falling apart. Drain the potatoes and let them steam dry for 5 minutes. Drying them is crucial for achieving maximum crispiness later.

While the potatoes are still warm, place them on a clean surface or a baking sheet. Use the bottom of a heavy glass or a potato masher to gently press down on each potato until it is about 1/2 inch thick. In a small bowl, mix the olive oil, garlic powder, salt, and pepper. Brush both sides of each smashed potato with the seasoned oil mixture.

Preheat your air fryer to 400°F (200°C). Place the smashed potatoes in the air fryer basket in a single layer. Do not overlap them, as they need space for air circulation to get crispy. Cook for 15 to 20 minutes, flipping halfway through. The potatoes are ready when the edges are deep golden brown and feel very firm to the touch.

Carefully remove the hot potatoes from the air fryer and place them on a serving platter. Immediately dollop or brush each potato with a generous amount of basil pesto. Sprinkle with grated Parmesan cheese and fresh parsley. Serve immediately with lemon wedges on the side for an extra pop of brightness.