Should You Buy These Artificial Intelligence (AI) Stocks in 2025?

data analysis expert Big Bear.ai (BBAI -7.48%) It continues to rise rapidly into 2024. On the morning of New Year’s Eve, the stock price rose 128% in 52 weeks. Curious people (and growth-hungry investors) want to know whether gains can be sustained beyond 2025.

So, let’s take a look at BigBear.ai and its growth prospects. Are these artificial intelligence (AI) stocks a good one to buy in early 2025?

What is BigBear.ai?

BigBear.ai may not be a legendary name, but its core business has been around since the 1980s.

The company’s current form came together in 2020 when a special purpose acquisition company (SPAC) called Lake Acquisition acquired several AI-based business intelligence companies. This initial showing included well-known software manufacturers such as the ProModel process simulation package along with technical consulting services from Open Solutions Group. Some of these businesses were founded in the late 1980s and early 1990s.

As a result, the organization provides AI-based data analytics services for healthcare, government, and large construction companies. The U.S. Army, Navy and Air Force are three of the company’s largest customers. The systems help people manage and organize equipment and other resources at scale, often under tight time schedules.

If my description of BigBear.ai sounds like this: C3.ai (AI -2.44%) or Palantir Technologies (PLTR -2.01%)You are on the right track. These companies often bid on the same contracts. Computerized support for the defense sector is a large and thriving market, and BigBear.ai is a diversified company with significant interests in other growth sectors.

BigBear.ai and its main rivals by the numbers

A direct comparison with C3.ai and Palantir raises some important questions about BigBear.ai. The company is entering some important markets, but how big is its business and how successful is it so far?

Here’s how BigBear.ai currently compares to its key competitors:

Data source: Collected from Finviz and YCharts as of December 31, 2024. TTM = after 12 months.

BigBear.ai is the smallest name in this group. Although the stock has soared recently, it hasn’t been able to match Palantir’s meteoric rise.

It’s important to note that BigBear.ai’s recent price increase wasn’t motivated by strong business results or the announcement of new contracts. In fact, the stock is down nearly 11% since the company’s most recent earnings report, which met Wall Street’s earnings expectations but fell short of agreed-upon revenue targets.

Instead, positive trends across the business intelligence and AI tools market have led to a surge in the stock price. Some of BigBear.ai’s biggest gains in recent months were actually inspired by good news from Palantir.

Is BigBear.ai a buy today?

Would I dare to buy or recommend BigBear.ai stock today? The stock looks cheap at 7.2x sales (well below C3.ai’s stock trading at 13.2x and Palantir’s 66.1x sales), but the company is also very unprofitable and has a huge debt load.

Since even Palantir’s cash machines trade at extremely high price-to-earnings ratios, it’s fair to say that the entire sector is fraught with earnings-based risk. But it’s usually up to the underdog to deliver shareholder returns through superior top-line growth in these scenarios, and BigBear.ai lags its larger peers in this category as well.

BBAI Revenue (TTM) data from YCharts

All things considered, I’d rather stay away from BigBear.ai stock right now. The company is struggling in a way that I would like to see at least until the spring of 2025. Palantir and C3.ai may be more affordable options for AI-focused growth investors, and there are plenty of other ways to leverage AI. AI opportunities in this market.