BigBear.ai (NYSE:BBAI) is trying to find its footing in the competitive world of AI solutions, especially against giants like Palantir (NASDAQ:PLTR). Currently, BigBear.ai’s market cap stands at $2.36 billion, while Palantir boasts a staggering $369 billion. In Q3, BigBear.ai reported $33.1 million in revenue, whereas Palantir generated an impressive $1.18 billion.
So, can BigBear.ai follow in Palantir’s successful footsteps? Investors are skeptical. Robert Izquierdo, a top investor, suggests that BigBear.ai’s current performance isn’t promising. While Palantir’s revenue soared by 63% year-over-year, BigBear.ai saw a 20% decline. This trend isn’t new; BigBear.ai has struggled with decreasing sales in recent years, particularly due to government budget cuts affecting its military contracts.
In contrast, Palantir’s government sales grew by 52%, indicating strong demand for its services. “It seems the government sees more value in Palantir’s offerings compared to BigBear.ai’s solutions,” notes Izquierdo.
Profitability is another red flag. BigBear.ai’s losses have increased, raising concerns about its future sustainability. However, there’s a bright spot: the recent acquisition of Ask Sage, a generative AI platform with 100,000 users across 16,000 U.S. government teams. If Ask Sage achieves its goal of $25 million in annual recurring revenue by 2025, it could represent significant growth for BigBear.ai.
This potential success isn’t immediate, though. Izquierdo believes that turning things around depends on BigBear.ai improving its sales and achieving profitability. While Wall Street sentiment leans towards caution, with only two analysts offering ratings—one Buy and one Hold—there’s still hope. The average 12-month price target for BigBear.ai stands at $6.50, hinting at a possible 20% upside.
In short, while BigBear.ai has some challenges ahead, it’s not out of the game just yet. It’s a journey worth watching as they strive to carve out their niche in an increasingly competitive landscape.
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