Okay, let’s talk AI stocks. Not the shiny, overhyped ones promising to solve world hunger, but the ones currently resembling a clearance rack at Best Buy. We’re looking at BigBear.ai (BBAI 0.81%) and C3.ai (AI 3.62%). Both of these companies managed to disappoint early investors – which, honestly, is becoming the default setting for tech stocks these days. BigBear.ai did the SPAC thing back in 2021, started at $9.84, and now you can pick it up for around $6. C3.ai? Launched in 2020 at $42, now trading around $13. It’s like watching money do a slow-motion swan dive.
Both are wrestling with slowing sales and, shall we say, a persistent lack of profitability. Throw in rising interest rates, and their valuations have taken a hit. Now, as someone who likes a good dividend (and let’s be real, these aren’t paying dividends anytime soon), I’m always looking for a turnaround story. But is either of these companies a worthwhile gamble, or are we just throwing good money after bad? Let’s dig in, because I need a distraction from my 401k.
The Similarities (and the Eye Rolls)
Both BigBear.ai and C3.ai are in the business of building AI modules – little digital helpers that plug into existing software to automate things. It’s the tech equivalent of hiring an intern to sort your inbox. BigBear.ai mostly caters to the government and defense sectors, which is code for “long sales cycles and a lot of paperwork.” C3.ai has a broader client base, which sounds nice until you realize it means they’re trying to be all things to all people.
BigBear.ai drops its modules into what they call “edge networks” – basically, the digital backroads where data travels. It’s faster than sending everything through a central server, which, frankly, sounds like a good idea. It also means the government can keep doing its thing even if the internet goes down. Very patriotic. C3.ai also uses edge networks, but they also like to install modules locally. A hybrid approach. It’s like they can’t commit to a single strategy.
Who’s Growing (or, More Accurately, Not Shrinking as Fast)?
From 2021 to 2024, BigBear.ai’s revenue grew at a whopping 3% annually. That’s… not great. It’s the kind of growth rate that makes your bank account sad. They had some issues with a bankrupt customer (Virgin Orbit – a cautionary tale if I ever saw one), competition, and general economic gloom. Honestly, it’s a mess.
They did acquire a vision AI firm called Pangiam, which, okay, sounds like something out of a sci-fi movie. It saved them from completely flatlining, but they’re still expecting an 11%-21% revenue decline in 2025. And their gross margin? Shrinking. Analysts don’t expect them to be profitable anytime soon. It’s a slow-motion train wreck.
They brought in Kevin McAleenan, a former Acting Secretary of Homeland Security, as their new CEO. The hope is he’ll unlock a flood of government contracts. But let’s be real, government contracts are not known for their speed or efficiency. It’s like waiting for a dial-up connection in a fiber optic world.
They’re predicting 23% revenue growth in 2026, but that’s mostly thanks to the Ask Sage acquisition. After that? 2% decline. It’s like they’re running on a treadmill, desperately trying to stay in place.
C3.ai, on the other hand, has seen 15% revenue growth from 2022 to 2025. Steady, if not spectacular. They’re rolling out new generative AI modules (buzzword alert!), securing federal contracts, and have a partnership with Baker Hughes that’s going strong through 2028. It’s not exactly a rocket ship, but it’s at least moving forward.
Their gross margins are also contracting, as they rely more on lower-margin services. And, surprise, they’re also deeply unprofitable. They’re predicting a 26% revenue decline in 2026 as they restructure their sales team. It’s like rearranging the deck chairs on the Titanic. They expect an 11% rise in 2027, but let’s face it, they’re facing headwinds from all directions.
The Verdict (and My Sanity)
BigBear.ai has an enterprise value of $2.7 billion, trading at 16 times this year’s sales. C3.ai, with an enterprise value of $1.2 billion, trades at just four times sales. It’s like comparing the price of a designer handbag to a reusable grocery tote.
Look, both of these companies have challenges. But it doesn’t make sense for BigBear.ai to trade at a higher valuation than C3.ai, given its slower growth and reliance on unpredictable government contracts. C3.ai has a better shot at a turnaround, even if it’s a long shot. BigBear.ai is still overvalued, based on the hope that McAleenan can magically conjure up more government deals. It’s a wishful thinking strategy, and I prefer my investments to be based on, you know, actual numbers.
So, if I had to pick one? C3.ai. But honestly, I’m starting to think my money would be better spent on a really good cup of coffee. At least that provides an immediate return on investment.
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2026-01-20 01:16