In a contest reminiscent of Palantir-like contenders, Wall Street anticipates potential surges of up to 108% for either BigBear.ai or C3.ai, yet some analysts advocate selling the latter.
Elevated AI stocks have swept through the market, propelled by soaring valuations. Many analysts predict this trend will continue due to AI's potential and expanding market size. Among these high-flyers, Palantir Technologies has stood out, skyrocketing an astounding 340% in 2024, primarily driven by its AI-analyzing software utilized by U.S. intelligence agencies.
In pursuit of similar AI powerhouses, investors have turned their attention to two lesser-known companies: BigBear.ai and C3.ai. These stocks have experienced notable volatility in the past year.
BigBear.ai: A Buy Opportunity?
BigBear.ai prides itself on its AI-powered decision-making capability and was bolstered by its 2024 acquisition of Pangiam – an AI specialist in global trade, travel, and digital identification. Focused on national security, supply chain, and digital identification, the company provides predictive and forecasting solutions, aiding risk management and facilitating interactions between suppliers and vendors.
In the first nine months of 2024, BigBear.ai reported a revenue of roughly $114.5 million, similar to the previous year, while incurring substantial losses. A significant portion of its revenue stems from government contracts.
Analysts from various firms, such as H.C. Wainwright, have assigned buy ratings to BigBear.ai, citing increased demand for its products and the extension of a senior convertible note. However, investors express concerns over the company's financial health, mainly due to the lack of revenue growth and a relatively weaker balance sheet.
C3.ai: A Sell or a Buy?
C3.ai has developed a platform that simplifies the development of enterprise AI solutions, providing data integration and management services, AI app development, and a studio for developing apps with minimal coding. In November 2024, the company announced a partnership with Microsoft's Azure platform, making its solution available to commercial clients.
C3.ai reported revenue growth of 29% in its most recent quarter – its highest growth rate in two years. Although losses have only marginally reduced, the company remains debt-free. With four sell ratings from analysts and an average price target of nearly 18% growth, there's a notable discrepancy between analysts' sell recommendations and the average price target growth rate.
In summary, both BigBear.ai and C3.ai present intriguing investment opportunities with their unique focuses, partnerships, and growth potential. However, investors should keep in mind the risks and consider dissecting financial data to make well-informed decisions.
Investors looking to diversify their portfolio in the AI sector might consider investing in BigBear.ai or C3.ai. Financial analysts have expressed mixed sentiments towards these companies, with some assigning buy ratings to BigBear.ai due to its potential revenue growth and partnerships, while others view C3.ai as a sell due to its substantial losses and a lack of significant profit margins. When it comes to money management, a thorough analysis of each company's financial statements and market trends is crucial before making any investment decisions.
