Did you miss out on the rise in Palantir’s stock? If so, perhaps you are among the beneficiaries of the 415% rise in shares of data analytics service provider BigBear.ai – which is touted as the next Palantir.
To be sure, really good news has propelled BigBear.ai’s stock. The U.S. Department of Defense has contracted to use the company’s artificial intelligence to “improve geopolitical risk assessments,” according to TipRanks.
Can BigBear.ai stock – which has a whopping 22.6% short interest ratio, according to the Wall Street Journal – rise further?
Analysts see the stock as too pricey and Palantir appears to be a much more solid investment, as I wrote in a February 2025 Forbes post. However, if BigBear.ai wins significant new contracts, it could deliver upside surprise and add to the company’s stock price.
I have contacted BigBear.ai for comment and will update this post if I receive a response.
BigBear.ai Performance And Prospects
BigBear.ai builds software models used to make operations more efficient. In 2023, about a third of the company’s revenues came from government agencies – with the balance coming from private enterprises, noted SeekingAlpha.
In addition to hiring a new CEO with ties to the Trump administration, BigBear.ai recently won some government contracts.
The company appointed Kevin McAleenan – who worked with government agencies and has a connection to the previous Trump administration – to be CEO in January 2025 and he “could help the company continue to win new contracts,” Nasdaq noted.
Moreover, earlier this month, the company’s stock more than doubled following the announcement that the Department of Defense awarded BigBear.ai a contract to “keep advancing its Virtual Anticipation Network,” SeekingAlpha reported. This follows another contract announcement with the Navy.
BigBear.ai has enjoyed some growth and is significantly unprofitable. In the September 2024-ending quarter, the company reported a 22% increase in revenue to $41.5 million while suffering a 29.3% negative net profit margin, according to Google Finance.
While BigBear.ai could grow to become a significant company, the company’s stock price has increased more than the fundamentals can justify. The share price is “driven by speculation and may decline,” noted SeekingAlpha. “BBAI is similar to Palantir but lacks profitability and a compelling product portfolio, making it a risky investment.”
Why Palantir’s Shares Could Rise Further
In the last year, Palantir shares have risen 350% and they could go higher. Driving up the shares were “stronger-than-expected fourth-quarter results and guidance driven by AI,” noted CNBC. The company’s commercial revenue increased 64% in the quarter while U.S. government sales rose 45%, according to my Forbes post.
Momentum at Palantir is “unlike anything that has come before,” CEO Alex Karp said, noted CNBC. Palantir expects federal budget cuts by the Elon Musk-run Department of Government Efficiency to add to the company’s growth. “Palantir’s real competition is a lack of accountability in government,” Palantir Chief Technology Officer Shyam Sankar said during the company’s February 3 investor conference call, according to Bloomberg.
Artificial intelligence is helping propel Palantir’s growth. The company’s AI platform helps clients “pull together disparate collections of data into a single model that they then can build, train and deploy in their day-to-day processes,” reported TheStreet.
AIP is increasingly in demand. For example, Palantir recently expanded a deal with the U.S. Army to as much as $619 million through 2028 while extending the company’s AI work with the U.S. Special Operations Command, Bloomberg noted.
Customers are also clamoring for Palantir’s ontology service — a framework that helps represent and connect entities, data, and processes for its commercial clients, noted my Forbes post.
Palantir Stock Could Be A Better Bet Than BigBear.ai
Compared to Palantir, BigBear.ai struggles to compete in a few areas. “BBAI is similar to Palantir but lacks profitability and a compelling product portfolio, making it a risky investment,” noted TipRanks.
What’s more Palantir’s financial condition looks stronger. Palantir produced $2.8 billion in revenues in 2024 – 17 times more than BigBear.ai’s $165 million. What’s more, Palantir has generated several quarters of positive free cash flow, while BigBear.ai still burns through cash and could dilute shareholders by using the elevate stock price to raise capital by selling shares, noted TipRanks.
Analysts see BigBear.ai’s stock as slightly too high. Specifically, Wall Street analysts with a 12-month price target envision a 6.25% decline for the shares to reach their average target of $7.50. Moreover, the $93 million in insider transactions in the last three months, suggest the company’s executives may not see upside in the stock, TipRanks wrote.
By contrast, Palantir stock may be expensive, but has stronger fundamentals in the view of Morgan Stanley. “Given the strength of the outlook, we acknowledge that we were wrong about our core fundamental catalyst of slowing growth below the 30% level due to the tougher compares in 2025,” wrote Morgan Stanley analyst Sanjit Singh as I wrote earlier this month. “This leaves us with valuation as the primary remaining concern.”
All is not lost for BigBear.ai bulls. With the high level of short-interest in the stock, shares could pop if the company reports expectations-beating growth and profitability and raises guidance next time it releases financial results.