BigBear.ai vs. Palantir: Which AI Defense Stock Is the Smarter Buy?

Core Insights - The article compares two companies, BigBear.ai Holdings Inc. (BBAI) and Palantir Technologies Inc. (PLTR), both of which operate in the AI and defense technology sectors, focusing on their capabilities and investment potential [1][3]. Company Overview - BigBear.ai specializes in predictive analytics and autonomous systems for defense and intelligence agencies, while Palantir offers comprehensive data integration and analysis platforms for both government and commercial clients [2]. - Both companies aim to leverage AI for enhancing national security and defense applications [2]. Financial Performance - BigBear.ai's contract backlog reached $385 million at the end of Q1 2025, a 30% increase year-over-year, indicating a strong pipeline for future revenue [5]. - Palantir's revenue surged 39% year-over-year to $884 million in Q1 2025, with U.S. revenue increasing by 55%, showcasing robust demand for its AI solutions [12]. - Palantir has raised its full-year 2025 revenue outlook to $3.89–3.90 billion, reflecting a 36% year-over-year growth [12]. Key Contracts and Initiatives - BigBear.ai secured a 3.5-year, $13.2 million contract to enhance the Pentagon's ORION analytics platform [4]. - Palantir's Project Maven work has exceeded $1 billion, marking its first billion-dollar contract, and it is involved in the Pentagon's Open DAGIR initiative [10]. Stock Performance - BigBear.ai's stock has declined 7% year-to-date in 2025, while Palantir's stock has increased by 63.6% during the same period [14]. - BigBear.ai's stock has shown signs of recovery with a 21.4% gain over the past month [14]. Valuation Metrics - BigBear.ai trades at a forward price-to-sales ratio of 6.87, significantly higher than its three-year median of 1.9 [16]. - Palantir's valuation is stretched, trading at approximately 66.85 times its forward price-to-sales ratio [16]. Earnings Estimates - The Zacks Consensus Estimate indicates a narrower loss for BigBear.ai in 2025, while Palantir is expected to achieve earnings of 59 cents per share for the current year [18][21].