Key Takeaways:
- BigBear.ai and C3.ai, two AI companies, have disappointed investors with slowing sales growth and persistent losses.
- Both companies develop AI modules for automation, acceleration, and optimization, but BigBear.ai focuses on government and defense contracts, while C3.ai serves a broader range of customers.
- C3.ai has a higher growth rate than BigBear.ai, with a 15% CAGR from 2022 to 2025, compared to BigBear.ai’s 3% CAGR from 2021 to 2024.
- BigBear.ai trades at a higher valuation than C3.ai, with an enterprise value of $2.7 billion, or 16 times this year’s sales, compared to C3.ai’s $1.2 billion, or four times this year’s sales.
- C3.ai has a better shot at a turnaround than BigBear.ai, due to its lower valuation and higher growth rate.
Introduction to BigBear.ai and C3.ai
BigBear.ai and C3.ai, two AI companies that went public in recent years, have struggled to meet investor expectations. BigBear.ai, which merged with a special purpose acquisition company (SPAC) in December 2021, has seen its stock price decline from $9.84 to around $6. C3.ai, which went public in December 2020, has seen its stock price drop from $42 to around $13. Both companies have faced challenges with slowing sales growth and persistent losses, and have been impacted by rising interest rates, which have compressed their valuations.
Similarities and Differences Between BigBear.ai and C3.ai
As noted by the company, "BigBear.ai generates most of its revenue from government and defense contracts," whereas C3.ai serves a broader range of enterprise and government customers. BigBear.ai’s AI modules are designed to be deployed directly into edge networks, allowing for faster response times and greater autonomy. In contrast, C3.ai’s modules are often used in tandem with locally installed modules, making them better suited for commercial customers. According to the article, "BigBear.ai directly deploys its modules into edge networks, which sit between central servers and end users. By intercepting that data as it flows between those two points, it can respond faster than locally installed AI services."
Growth Rates and Revenue
C3.ai has grown at a faster rate than BigBear.ai, with a 15% CAGR from 2022 to 2025, compared to BigBear.ai’s 3% CAGR from 2021 to 2024. However, both companies face significant challenges in the coming years. BigBear.ai expects its revenue to decline by 11%-21% in 2025, and analysts expect it to remain unprofitable for the foreseeable future. C3.ai, on the other hand, expects its revenue to decline by 26% in 2026, but expects to stabilize its sales and marketing efforts and grow revenue by 11% in 2027. As the article states, "For 2025, it expects its revenue to decline another 11%-21% as the federal government reins in its spending and consolidates its data infrastructure."
Valuations and Turnaround Potential
BigBear.ai trades at a significantly higher valuation than C3.ai, with an enterprise value of $2.7 billion, or 16 times this year’s sales, compared to C3.ai’s $1.2 billion, or four times this year’s sales. Given C3.ai’s higher growth rate and lower valuation, it appears to have a better shot at a turnaround than BigBear.ai. As the article notes, "it doesn’t make much sense for BigBear.ai to trade at a higher valuation than C3.ai, given that it generates less revenue, grows more slowly, and is more heavily dependent on lumpy government contracts." The appointment of Kevin McAleenan as BigBear.ai’s new CEO has sparked hopes of new government contracts, but it is unclear whether this will be enough to drive significant growth and profitability.
Conclusion
In conclusion, while both BigBear.ai and C3.ai face significant challenges, C3.ai appears to have a better shot at a turnaround due to its lower valuation and higher growth rate. As the article states, "C3.ai has a better shot at a turnaround than BigBear.ai, which still seems overvalued based on the belief that McAleenan can bring in more government contracts." Contrarian investors may want to consider C3.ai as a potential turnaround play, but should be cautious and carefully consider the risks and challenges facing both companies.
https://www.fool.com/investing/2026/01/19/better-artificial-intelligence-stock-bigbearai-vs/