BigBear.ai's (BBAI +5.08%) stock price has rallied about 120% over the past 12 months, but it's still trading nearly 70% below its all-time high from April 2022. The AI software developer bounced back as its revenue growth stabilized and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved.
Many of its investors initially fled when its revenue growth flatlined in 2023 as it struggled with macroeconomic headwinds, tough competition, and the bankruptcy of its major customer Virgin Orbit. But under Mandy Long, a former IBM executive who took over as its CEO in late 2022, it stabilized its business by acquiring the AI vision firm Pangiam in an all-stock takeover, securing new government contracts, and trimming its workforce. It also secured more data-sharing deals for its AI analytics modules, which can be directly plugged into an organization's existing software and edge networks.
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For 2024, analysts expect BigBear.ai's revenue to grow 8% to $168 million with a negative adjusted EBITDA of $1 million. For 2025, they expect its revenue to rise 14% to $193 million with a positive adjusted EBITDA of $5 million under Kevin McAleenan, Pangiam's founder who recently succeeded Mandy Long as BigBear.ai's new CEO.
But with enterprise value of $1.13 billion, BigBear.ai stock isn't cheap at 6 times its projected sales for 2025. So instead of wondering if it can keep growing into its rising valuations, investors should check out two smaller AI stocks that might become even more valuable over the next two years: Innodata (INOD +5.95%) and Serve Robotics (SERV +5.42%).
Innodata
Innodata, an analytics company that went public in 1993, was once considered a slow-growth underdog in a crowded market. But all that changed when it launched a suite of task-specific microservices for preparing data for AI applications in 2018.
When a large company develops a new AI project, it can spend 80% of its time preparing the data and just 20% of the time training the AI algorithm. That's an inefficient use of time for companies that are constantly feeding massive amounts of data into their large language models (LLMs) and other AI tools. To streamline that process, five of the Magnificent Seven companies started to use Innodata's new AI microservices to clean up their data.
NASDAQ: INOD
Key Data Points
As a result, Innodata's revenue grew at a compound annual growth rate (CAGR) of 12% from 2019 to 2023. But as the booming AI market expands, analysts expect its revenue to rise at an even faster CAGR of 42% from 2023 to 2026. They also expect it to turn profitable in 2024 and grow its earnings per share at a CAGR of 21% over the following two years.
That incredible acceleration makes it one of the market's fastest-growing AI stocks. But with an enterprise value of $1.07 billion, it still trades at less than 5 times its 2025 sales. As more growth-oriented AI investors start paying attention to Innodata, it could easily outperform BigBear.ai and eclipse its enterprise value within the next two years.
Serve Robotics
Serve Robotics, a developer of autonomous delivery robots, was founded in 2017 within Postmates, the food delivery service that was acquired by Uber Technologies in 2020. Uber spun off Serve in 2021, but it continued to use its delivery robots for Uber Eats in select areas of Los Angeles. Its newest Gen 3 robots can travel at a max speed of 11 mph, last up to 48 miles on a single charge, and carry 15 gallons of cargo. They're also resistant to heavy rain and extreme temperatures.
NASDAQ: SERV
Key Data Points
Serve owns a fleet of 100 robots, but it only operated 59 active robots across the L.A. area for Uber Eats in the third quarter of 2024. It went public through a reverse merger with a blank-check company in 2023, but it's barely generating any revenue.
For the full year, analysts expect Serve to generate just $1.9 million in revenue with a net loss of $34.3 million. So at first glance, it might seem absurd that Serve has an enterprise value of $803 million -- or 423 times its estimated sales for 2024.
However, it could scale up its business over the next few years. Uber Eats plans to deploy up to 2,000 of Serve's robots across the L.A. and Dallas-Fort Worth metro areas in 2025. If it achieves that ambitious expansion, analysts expect its revenue to surge to $59.5 million in 2026. Based on that forecast, Serve doesn't seem extremely expensive at 13 times its 2026 sales -- so its enterprise value might just surpass BigBear.ai's over the next two years as Uber Eats rolls out more of its delivery robots.
