Better Small-Cap Artificial Intelligence Stock: BigBear.ai vs. Innodata

Core Insights - The stock market's turbulent start to 2025 contrasts with the record-breaking highs of 2024, yet the AI revolution continues to drive productivity in the global economy [1] Group 1: BigBear.ai - BigBear.ai focuses on artificial intelligence, delivering AI-driven decision intelligence through its platform that extracts insights from large datasets [3] - The company has secured major government contracts, including with the Department of Defense, and is expanding into supply chains, logistics, and healthcare [4] - BigBear.ai's Pangiam digital identity brand utilizes images and biometrics for real-time threat detection, with notable clients including major global airports and the Department of Homeland Security [5] - For the year ended December 31, 2024, BigBear.ai reported $158 million in revenue, a 2$418 million, reflecting strong underlying demand [6] - Although currently unprofitable, BigBear.ai has over $115 million in cash, allowing for strategic growth opportunities [7] Group 2: Innodata - Innodata specializes in data preparation, focusing on gathering, cleaning, and organizing raw information for training AI models, which is crucial for generative AI applications [8] - With a market capitalization of$1.2 billion, Innodata reported a 96% year-over-year revenue increase to $171 million in 2024, driven by relationships with key customers [9] - Innodata achieved profitability in 2024, reporting$28.7 million in net income, a turnaround from a $900,000 loss in 2023, with management projecting a 40% revenue increase in 2025 [10] - Innodata's forward price-to-sales ratio is 4.8, representing a discount compared to BigBear.ai's 5.2, while its forward price-to-earnings ratio of 43 reflects strong earnings momentum [10][11] Group 3: Comparative Analysis - Both BigBear.ai and Innodata have distinct strengths, but Innodata is viewed as the better AI stock due to its proven product ecosystem and robust fundamentals [12] - Until BigBear.ai can effectively monetize its order backlog, Innodata is expected to outperform, making it a compelling option for investors seeking small-cap exposure to AI [13]