Here is a revised version of the article in the third person:
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Two leading artificial intelligence (AI) stocks over the past year are Palantir Technologies (PLTR) and BigBear.ai (BBAI). As of the current period, Palantir’s stock has increased by nearly 500%, while BigBear.ai’s stock has risen by over 150%.
Both companies have strong connections to the U.S. federal government and the defense industry. Palantir was established with the aim of adapting fraud protection tools, similar to those used by PayPal, to detect threats and protect the U.S. post-September 11. Its initial product, Gotham, aggregates and analyzes data from varied sources, serving functions like tracking terrorist financing and locating military targets. The U.S. government remains Palantir’s largest client, contributing 42% of its recent quarterly revenue.
BigBear.ai emerged from the merger of analytics company BigBear and systems integrator NuWave by AI Industrial Partners. It later incorporated two additional analytics firms and became public via a special purpose acquisition company (SPAC) in 2021. The company mainly works as a government contractor, focusing on defense, national security, and IT modernization, securing contracts with agencies such as the Department of Defense (DoD) and the National Security Agency (NSA).
In the private sector, Palantir’s growth is driven by U.S. commercial clients using its Artificial Intelligence Platform (AIP), which enables AI model application to solve practical issues across diverse industries. Meanwhile, BigBear.ai’s technology extends beyond defense to industries such as manufacturing, life sciences, and logistics. It also has a presence in major U.S. airports, providing threat detection systems. Internationally, the company is expanding, exemplified by its partnership with Smiths Detection using its algorithms for luggage screening.
There are distinct differences in growth and margins between the two companies. Palantir has been experiencing accelerated revenue growth, largely due to increasing adoption by U.S. commercial clients and government agencies. Its revenue recently rose to $883.9 million, marking a 39% increase. Conversely, BigBear.ai’s revenue growth is inconsistent, with only a 5% rise last quarter, reflecting the unpredictability of government spending.
Palantir benefits from higher gross margins typical of software companies, reporting 80.4% last quarter. In comparison, BigBear.ai’s gross margin was 21.3%, attributed to its role as a systems integrator involving significant on-premises work by its engineers and data scientists.
Regarding valuation, BigBear.ai is considered more affordable, trading at a forward price-to-sales (P/S) ratio of 7.2 times 2025 analyst estimates, compared to Palantir’s ratio of 75.6. Despite the lower valuation, Palantir’s strong revenue growth and high margins present a compelling business model with significant future potential.
Therefore, Palantir is viewed as a more favorable long-term investment, in spite of its high valuation.