BigBear.ai vs. C3.ai: Which AI Stock is the Better Bet?

Nations are ramping up artificial intelligence (AI) capabilities, and the U.S. is determined to lead the world in AI. Two key players in this race are BigBear.ai and C3.ai, both of which are helping the U.S. government achieve its AI goals. But which stock is the better investment for the long haul?

AI as Essential Infrastructure

As Nvidia CEO Jensen Huang explained, “Countries around the world are recognizing AI as essential infrastructure—just like electricity and the internet.” The U.S. government, under the Trump administration, has signaled its intent to lead the world in AI. This has created a significant opportunity for companies like BigBear.ai (NYSE: BBAI) and C3.ai (NYSE: AI).

BigBear.ai: Focusing on National Security

BigBear.ai delivers various AI solutions that focus on national security and infrastructure. For example, it provides facial recognition software to many airports to screen passengers for security risks, and it’s helping the U.S. Navy construct submarines with its AI-enhanced shipbuilding software.

In the first quarter, BigBear.ai reported $34.8 million in revenue, a 5% year-over-year increase. The company also benefited from the exercise of 2024 warrants, which brought in $64.7 million in gross proceeds. However, BigBear.ai is not profitable. Its Q1 net loss totaled $62 million, and some of its operating expenses increased year over year.

BigBear.ai also possesses substantial debt, with Q1 total liabilities of $198.5 million, including long-term debt of $100.6 million. Despite these challenges, the company has experienced leadership changes, with Kevin McAleenan, the new CEO, bringing valuable experience from his role as Acting Secretary of the U.S. Department of Homeland Security.

C3.ai: Diverse AI Solutions

C3.ai offers both ready-made and custom AI solutions. Government customers include the U.S. Air Force, the Marine Corps, and the National Science Foundation. It also has a sizable non-government business with clients such as ExxonMobil and Dow.

C3.ai’s business has been growing, and it is positioning itself as a leader in the AI market. The company’s diverse portfolio and strong client base make it a compelling investment. However, like BigBear.ai, C3.ai is not yet profitable, and it faces challenges in scaling its operations and maintaining growth.

Key Considerations for Investors

When deciding between BigBear.ai and C3.ai, investors should consider several factors. BigBear.ai’s focus on national security and infrastructure, along with its new leadership, could be advantageous. However, the company’s profitability and debt levels are significant concerns.

On the other hand, C3.ai’s diverse client base and strong market position in both government and non-government sectors make it a robust choice. While it also faces profitability challenges, its broader market reach and innovative solutions could drive long-term growth.

In conclusion, both BigBear.ai and C3.ai are playing crucial roles in the U.S. government’s AI initiatives. Investors should carefully weigh the strengths and challenges of each company to make an informed decision.