Go Big With Palantir or Bet Small With BigBear.ai?

Core Insights - Palantir Technologies Inc. and BigBear.ai Holdings, Inc. are both benefiting from the expanding artificial intelligence software market, with both stocks increasing over 300% in the past year [1] Palantir Technologies Inc. - Palantir reported a strong second-quarter performance, with U.S. revenues increasing by 68% year-over-year, driven by a 93% rise in commercial revenues and a 53% increase in government revenues [2][10] - The company secured 157 deals in Q2, each worth at least $1 million, with 66 deals valued at a minimum of $5 million, leading to a record total contract value of $2.27 billion, a 140% year-over-year increase [3][10] - Palantir raised its full-year 2025 revenue guidance to between $4.142 billion and $4.150 billion, with projected Q3 revenues between $1.083 billion and $1.087 billion [4] BigBear.ai Holdings, Inc. - BigBear.ai's second-quarter performance was disappointing, with revenues totaling $32.5 million, down 18% from $39.8 million in the same period last year [5][10] - The company revised its full-year revenue forecast to between $125 million and $140 million, down from a previous estimate of $160 million to $180 million, due to delays in U.S. government contract approvals [6] - BigBear.ai had a backlog of $380 million as of June 30, 2025, but only 4% of this backlog is secured and authorized, indicating potential challenges in contract approval processes [7] - The company reported a non-GAAP adjusted EBITDA loss of $8.5 million in Q2, significantly higher than the $3.7 million loss a year earlier, attributed to increased R&D expenses and low gross margins [8] Investment Considerations - Investors may consider heavily investing in Palantir due to its strong growth prospects and raised revenue forecasts, with a forward price-to-sales ratio of 103.27, significantly higher than the industry average of 6.28 [9] - In contrast, BigBear.ai is struggling to establish a strong customer base and remains unprofitable, raising concerns about its long-term sustainability [11] - Despite challenges, BigBear.ai's recent partnership with the U.S. Navy and deployment of its solutions may improve its prospects, suggesting a small allocation of investment could be considered [12]