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Palantir Technologies is bringing in customers in a way that's beyond what BigBear.ai can do.
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Amazon created a powerhouse in e-commerce, but its future lies in AI.
There's little doubt that Palantir Technologies (NASDAQ: PLTR) is one of the most significant stock market stories of the decade, so far. The data mining company unveiled its Artificial Intelligence Platform (AIP) in 2023 and since has been climbing fast.
Palantir jumped 340% in 2024, making it the best-performing stock in the S&P 500, and its 118% gain so far this year puts it at a close second to Seagate Technology for 2025. An investment in Palantir of just $1,000 three years ago would have given you $21,000 today.
Undoubtedly, people are looking for the next Palantir, and for many, BigBear.ai (NYSE: BBAI) is a contender. Like Palantir, BigBear.ai is a government contractor that is using artificial intelligence (AI) to develop solutions for defense and intelligence agencies.
But if you're hoping BigBear.ai can match Palantir, I think you'll be mistaken. There are three other names you should consider instead to play the AI space.
Palantir is growing so fast because it's reeling in contracts hand over fist. It closed $2.27 billion in total contract value sales in the second quarter, up 140% from last year. Its customer count grew 43% for the quarter. That's why the company's revenue growth is so steep -- it's gone from about $460 million per quarter to $1 billion a quarter in just three years.
BigBear.ai, however, had revenue of just $32.4 million in the second quarter, down 18% from a year ago. Management said the drop was because of lower volume of U.S. Army programs, but that also shines a spotlight on the company's biggest problem. BigBear.ai's biggest contract is with the Army, a $165 million deal to modernize and incorporate AI into its platforms. If the Army slows down its work for any reason, then BigBear.ai and its stock suffer.
So, what AI companies are a better play than BigBear.ai now?
I completely understand wanting to get in on the next Palantir, but I also see a lot of value in investing in the original. While BigBear.ai has to create new platforms and new products for each of its clients, Palantir's AIP is designed to work with multiple government agencies and commercial businesses.
Palantir rolls out AIP in boot camps so potential customers can try it out, and the results speak for themselves -- the company closed 157 deals in the second quarter that were valued at $1 million or more. Sixty-six of those were more than $5 million in value and 42 were more than $10 million. BigBear.ai can't do that.