In the ever-evolving AI sector, even high-flying stocks must eventually demonstrate real business value. Unfortunately, BigBear.ai falls short in this aspect.
Currently, many investors are attracted to artificial intelligence stocks, which can be a shrewd investment as AI reshapes various industries. However, the perception is that almost any AI stock is a guaranteed success, leading some investors to overlook important evaluations of these companies.
With this in mind, two AI companies experiencing significant share price increases are Nvidia (NVDA -2.26%) and BigBear.ai (BBAI 0.95%). It may be beneficial to examine both companies to determine which represents a better AI stock investment today.
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Nvidia’s Current Situation
Nvidia takes the spotlight in this comparison due to its phenomenal growth as demand for its AI semiconductors swells. It’s estimated that 70% to 95% of data centers rely on Nvidia’s AI processors, indicating a continued growth trajectory for the company.
For instance, Nvidia’s total sales skyrocketed 114% to $130.5 billion in fiscal 2025, and earnings surged 147% to $2.94 per share. This expansion is largely driven by its data center segment, which saw a 142% increase in revenue to $115 billion last year.
This impressive financial performance has led to a 57% increase in Nvidia’s stock over the past year. While its current price-to-earnings ratio sits around 56—higher than average—it’s still lower than the semiconductor industry’s average P/E ratio of 64.
BigBear.ai’s Challenges
BigBear.ai specializes in AI data analytics, assisting organizations and the U.S. government in navigating their data for decision-making. This burgeoning sector has lifted stocks of similar companies, such as Palantir, but BigBear.ai’s stock has shown a staggering 323% increase over the past year.
However, despite these gains, significant concerns remain regarding BigBear.ai, particularly its lack of robust revenue growth. The company reported only a 5% sales increase in Q1, totaling $34.8 million, with an annual forecast of only $160 million to $180 million—representing a mere 7.5% growth at the midpoint.
These sales figures are underwhelming for a small AI enterprise aiming to capture a growing market. Furthermore, 52% of its revenue originates from just four customers, raising concerns about sustainability if any of these clients were to leave.
Final Assessment: Nvidia vs. BigBear.ai
Although Nvidia’s stock isn’t street cheap and carries inherent risks typical of high-growth AI stocks, its profitability, consistent revenue expansion, and leadership in the AI semiconductor market make it the clear favorite over BigBear.ai.
In contrast, BigBear.ai appears overvalued, shows lackluster revenue growth, and has yet to turn a profit. This reinforces the belief that Nvidia is a stronger investment choice, likely to perform better over the long haul.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
