Better AI Stock: Super Micro Computer vs. BigBear.ai

Core Viewpoint - Super Micro Computer (Supermicro) and BigBear.ai represent two distinct investment opportunities in the AI market, with Supermicro showing more potential for recovery compared to BigBear.ai Group 1: Super Micro Computer (Supermicro) - Supermicro has established an early-mover advantage in the dedicated AI server market with its liquid-cooled systems and maintains a strong relationship with Nvidia for high-end data center GPUs [3] - The company experienced significant revenue growth, with a 46% increase in fiscal 2022, 37% in 2023, and an impressive 110% in 2024 [4] - Despite facing serious challenges, including accusations of inflating revenues and losing its auditor, Supermicro's stock rebounded after hiring a new auditor and filing its overdue 10-K [5][6] - Revenue more than doubled year-over-year in the first half of fiscal 2025, with anticipated growth of 74%-101% for the full year, and analysts expect a compound annual growth rate (CAGR) of 38% for revenue and 22% for EPS from fiscal 2024 to 2027 [7] - The stock trades at just 10 times next year's earnings, indicating it may be undervalued relative to its growth potential [7][14] Group 2: BigBear.ai - BigBear.ai has struggled to meet its growth targets, with revenue only reaching $146 million in 2021 and $158 million in 2024, far below its initial projections [9] - The company has faced significant challenges, including competition from larger AI firms and the bankruptcy of its top customer, Virgin Orbit, leading to a net loss that more than doubled from $124 million in 2021 to $257 million in 2024 [10] - BigBear.ai is on its third CEO since going public and has delayed its 10-K filing to restate financial statements, which has caused concern among investors [10] - Analysts expect BigBear.ai's revenue to grow at a CAGR of 10% from 2024 to 2026, but with a market cap of $820 million, it is not considered cheap at 4 times next year's sales [13] Group 3: Investment Comparison - Supermicro has resolved its most pressing issues and appears to be a better investment opportunity in the AI market compared to BigBear.ai, which has yet to prove the sustainability of its business model [14][15] - The escalating trade war poses a risk to Supermicro's near-term sales and margins, but it still shows more promise than BigBear.ai [8][14]