Better Artificial Intelligence Stock: BigBear.ai vs. Palantir

Artificial intelligence (AI) holds a lot of promise for many industries, but one area where it's already proving useful is in data analytics. Governments and corporations are eager to harness AI-powered insights to optimize everything from military operations to supply chains and financial forecasting.

Morningstar, a financial services company, predicts the AI analytics market could be worth a massive $1.4 trillion by 2033.

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Two companies making a name for themselves in this upcoming market are BigBear.ai (NYSE: BBAI) and Palantir Technologies (NASDAQ: PLTR), and both have seen their share prices soar over the past year, rising 131% and 487%, respectively.

But despite the impressive gains in share price for both, only one company looks like it's on a good trajectory right now. Here's why Palantir wins out over BigBear.ai as the better AI stock.

Image source: Getty Images.

BigBear.ai has rich potential but poor results

Companies of all shapes and sizes are trying to figure out how they can use AI to better their products, services, and internal efficiencies. All of this is helping to build a fast-growing AI analytics market in both the commercial and government spaces.

BigBear.ai has been trying to tap into both, but so far it's had unimpressive results. Revenue increased by just 5% in the most recent quarter, to $24.8 million. This follows a meager 2% annual revenue growth between 2023 and 2024. Management estimates sales will increase by about 8% this year, at the midpoint of guidance, which is fairly sluggish for a start-up tapping into a booming AI analytics industry.

What's more, BigBear.ai is burning through cash. The company had an adjusted EBITDA loss of $7 million in the first quarter, much higher than its loss of $1.7 million in the year-ago quarter.

Management said that higher selling, general, and administrative expenses and increasing costs for research and development costs led to the expanded losses. Without meaningful revenue growth, those rising expenses are problematic.

Palantir has had success in tapping into AI analytics

The contrast between BigBear.ai and Palantir is most dramatic when looking at sales and earnings. While BigBear's sales have been lethargic, Palantir's are accelerating. The company's revenue rose 39% in the first quarter to $884 million. And while BigBear.ai is unprofitable, Palantir's adjusted earnings rose 62% to $0.13 per share in the most recent quarter.

Palantir is successfully tapping into both commercial and government contracts, with customers using its AI analytics for everything from electric grid monitoring to defense and military operations management.

The company also appears to be on a solid growth trajectory. Palantir's management recently raised the company's outlook for 2025, with revenue estimated to increase 36% this year, up from its previous guidance for 31% growth.

And its leadership has been far more stable than BigBear.ai's. Alex Karp, CEO of Palantir, has led the company since 2004. Meanwhile, BigBear.ai is on its third CEO since the company went public just four years ago.

Palantir is the better artificial intelligence stock

Any way you compare these two AI data analytics companies, Palantir comes out ahead. The company's strong sales growth, stable leadership, and profitability make it far more likely that it will continue to be the better AI stock compared to BigBear.ai.

But one word of caution before you buy Palantir stock. The company's huge gains in share price over the past few years mean that its stock trades at an extremely high premium. Its trailing price-to-earnings ratio (P/E) is an astounding 536 right now, far more expensive than the S&P 500's P/E of about 28.

This means the company would have to continue growing at an astronomical rate to justify its current share price. If you're committed to buying Palantir, just know that you're paying a high price for it, and maybe start with just a small position.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.