BigBear.ai (BBAI +0.27%) and Pony AI (PONY 5.23%) represent two different ways to invest in the booming artificial intelligence (AI) market. BigBear.ai develops AI modules that can be plugged into edge networks to ingest data, identify trends, and predict outcomes. Pony AI builds its own robotaxis and driverless logistics vehicles.
BigBear.ai went public by merging with a special purpose acquisition company (SPAC) in December 2021. Its stock opened at $9.84 per share, but it now trades at $6. Pony AI, which is based in both China and the U.S., went public via a traditional IPO at $13 a share last November and now trades at $16. Which of these AI stocks is a better buy right now?
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BigBear.ai has a lot to prove
BigBear.ai's three main AI modules (Observe, Orient, and Dominate) analyze the data that flows into the edge networks, which sit between origin servers and end users. It shares that data with bigger data mining and analytics companies like Palantir Technologies, and it focuses heavily on government and defense contracts instead of commercial deals.
NYSE: BBAI
Key Data Points
BigBear.ai's revenue flatlined in 2023 and rose just 2% in 2024. It grappled with the bankruptcy of its top customer, Virgin Orbit, intense competition from similar AI module makers, and a challenging macro environment for enterprise software companies. It remains deeply unprofitable on a generally accepted accounting principles (GAAP) basis.
Under Mandy Long, who took the helm as its CEO in late 2022, BigBear.ai acquired the AI vision firm Pangiam in an all-stock deal and reined in its spending. Pangiam's CEO, Kevin McAleenan, who previously served as the Acting Secretary of the Department of Homeland Security (DHS) under the first Trump administration, succeeded Long as its new CEO in early 2025 and focused on gaining more government contracts.
After McAleenan took over, BigBear.ai's backlog grew as it secured new digital ID and biometrics deals with the DHS, a modernization project for the U.S. military's Orion Decision Support Platform (DSP), and other supply chain projects.
But from 2024 to 2027, analysts expect its revenue to only grow at a CAGR of less than 1% as it stays unprofitable. With a market cap of $2.75 billion, it still looks richly valued at 18 times next year's sales. That high valuation -- which was likely inflated by the broader buying frenzy in AI stocks and the DHS's recent deployment of Pangiam's biometric tools in airports -- could cap its upside potential in this frothy market and set it up for a steep drop in the next market crash.
Pony AI could have a brighter future
Pony AI operates fleets of robotaxis and driverless logistics vehicles through partnerships with big automakers like Toyota and GAC Aion. Most of its revenue comes from those passenger fees and logistics payments, but it also bundles together its full-stack autonomous vehicle solutions for individually owned passenger vehicles.
NASDAQ: PONY
Key Data Points
Pony AI initially attracted a lot of attention because its co-founder and CEO, James Peng, previously oversaw the driverless vehicle programs at Alphabet's Google and Baidu. It's also been expanding beyond China and licensing its technologies to other automakers to generate higher-margin licensing revenue.
Those plans sound promising, but Pony AI isn't a high-growth company yet. Its revenue only rose 5% in 2023 and 4% in 2024, and it's still deeply unprofitable on a GAAP basis. Its growth was throttled by technological and regulatory bottlenecks, intense competition from other robotaxi service providers such as Baidu, lumpy revenue from its licensing and engineering deals, and the sluggish expansion of its own fleet of robotaxis and logistics vehicles.
That capital-intensive expansion should keep its bottom line in the red for the foreseeable future. However, it expects its newest "Gen 7" robotaxis to reduce its bill of materials (BOM) by about 70% and help it gradually stabilize its gross margins and narrow its net losses.
But from 2024 to 2027, analysts expect Pony AI's revenue to grow at a CAGR of 42% as it finally scales up its business, clears its regulatory challenges, and economies of scale kick in. But with a market cap of $7.08 billion, it is already richly valued at 67 times next year's sales.
The better buy: BigBear.ai
I wouldn't rush to buy either of these speculative AI stocks right now. But if I had to choose one over the other, I'd stick with BigBear.ai. Its near-term growth might be anemic, but its outlook could improve as it recognizes more revenue from its recent government contracts. It could also become a tempting takeover target for a larger enterprise AI software company. Pony AI might also have a bright future, but it still has a lot to prove while its stock is trading at meme stock valuations.
