Two of the main synthetic intelligence (AI) shares during the last 12 months are Palantir Applied sciences (PLTR 7.69%) and BigBear.ai (BBAI 7.88%). Palantir’s inventory has surged just about 500% during the last 12 months, whilst BigBear.ai’s inventory has jumped greater than 150%, as of this writing.
With each shares appearing smartly, let us take a look at which one is more likely to outperform over the long term.
A focal point at the protection trade
Each Palantir and BigBear.ai have sturdy ties to the U.S. federal govt and the protection trade. Palantir was once based with the concept that it might take fraud coverage gear like the ones utilized by PayPal to assist discover hidden threats and offer protection to the U.S. from terrorists following the 9/11 terrorist assault.
Palantir’s first product, Gotham, can collect and analyze knowledge from a limiteless and wide selection of knowledge units and has been utilized by the federal government for things like figuring out and monitoring terrorist financing, in addition to finding high-value objectives in army zones. The U.S. govt stays Palantir’s biggest buyer as of late, accounting for 42% of its income closing quarter.
BigBear.ai, in the meantime, was once shaped when non-public fairness company AI Business Companions merged analytics corporate BigBear and techniques integrator NuWave in combination, later including two different analytic corporations and taking it public via a different objective acquisition corporate (SPAC) again in 2021. The corporate is in large part a central authority contractor, with a focal point on protection, nationwide safety, and IT modernization. It’s been awarded contracts with a lot of govt businesses, together with the Division of Protection (DoD), Nationwide Safety Company (NSA), Division of Fatherland Safety, and the Federal Aviation Management (FAA).
Symbol supply: Getty Photographs.
Outdoor the general public sector, Palantir’s greatest house of expansion has come from U.S. industrial shoppers that experience embraced its Synthetic Intelligence Platform (AIP), which matches as an orchestration layer that permits customers to use AI fashions to assist remedy real-world issues. The platform can be utilized for a plethora of duties throughout disparate industries, with everybody from clinic operators to pipeline corporations now the usage of AIP.
BigBear.ai’s tech additionally is not only restricted to protection, with it getting used within the production, lifestyles sciences, and logistics industries. At the industrial aspect, you’ll to find its risk detection techniques in main U.S. airports like Dallas-Castle Price and Denver Global.
The world over, the corporate is beginning to acquire traction as smartly. One instance is its partnership with Smiths Detection, the place BigBear.ai’s algorithms are getting used to assist routinely locate prohibited pieces in baggage. Those are built-in with CT scanners and are serving to the corporate open up new international distribution channels for its risk detection tech.
Other expansion and margin profiles
Whilst each shares were nice performers during the last 12 months, their income expansion has been a lot other. Palantir has been seeing accelerating income expansion as U.S. industrial shoppers flock to AIP and the U.S. govt starts to include AI. Ultimate quarter, its income surged 39% to $883.9 million, marking the 7th immediately quarter its income expansion has larger.
Metric
Q2 ’23
Q3 ’23
This fall ’24
Q1 ’24
Q2 ’24
Q3 ’24
This fall ’24
Q1 ’25
Income expansion
13%
17%
20%
21%
27%
30%
36%
39%
Information supply: Palantir quarterly studies.
BigBear.ai’s income expansion, alternatively, can best possible be described as lumpy. Ultimate quarter, its income rose simply 5% to $34.8 million. On the other hand, in 2024, it had one quarter the place income declined through 21% (Q1), and some other quarter the place income jumped 22% (Q3). Govt spending may also be unpredictable, which has proven up in BigBear.ai’s effects.
There could also be a large distinction between the gross margins of Palantir and BigBear.ai. Gross margin is the most important metric, since it’s at once tied to how simply an organization can flip income into income. Palantir has vintage excessive instrument gross margins, checking in at 80.4% closing quarter.
BigBear.ai’s gross margin, in the meantime, was once most effective 21.3% in Q1. This stems from BigBear.ai nonetheless being extra of a techniques integrator and govt contractor than a instrument AI corporate. Its engineers and information scientists will have to co-locate and be on-premises for plenty of of its govt tasks, which provides a large number of prices.
Which is the easier AI inventory?
In relation to valuation, BigBear.ai is the a lot less expensive inventory, buying and selling at a ahead price-to-sales (P/S) ratio of seven.2 instances 2025 analyst estimates, as opposed to 75.6 instances for Palantir. In accordance with that metric, its valuation is not up to a 10th of its rival AI inventory.
PLTR PS Ratio (Forward) knowledge through YCharts
That mentioned, Palantir has a lot better income expansion and predictability, in addition to hugely awesome gross margins. It obviously has the extra horny trade fashion, and the chance in entrance of it’s monumental.
As such, I believe Palantir is the easier inventory to possess over the long term, in spite of its excessive valuation.
