BigBear.ai (BBAI +0.08%) and UiPath (PATH 0.31%) represent two different ways to invest in the booming AI market. BigBear.ai plugs its AI modules into edge networks to intercept and analyze incoming data, while UiPath automates repetitive tasks with its software robots.
Both stocks disappointed their early investors. BigBear.ai, which went public by merging with a special purpose acquisition company (SPAC) in December 2021, opened at $9.84 but now trades at less than $7. UiPath, which went public at $56 in its IPO in April 2021, trades at about $18. Should you invest in either of these oft-overlooked AI stocks today?
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BigBear.ai faces tough near-term headwinds
BigBear.ai develops three AI modules -- Observe, Orient, and Dominate -- which ingest data, spot recurring trends, and predict future outcomes, respectively. It plugs these modules into the edge networks that sit between an organization's origin servers and its end users.
By intercepting that data before it reaches the origin server, it can provide faster responses than on-site AI applications. It also recently agreed to acquire the generative AI platform provider Ask Sage to expand that ecosystem, and that $250 million acquisition should close by the end of 2025 or early 2026.
NYSE: BBAI
Key Data Points
BigBear.ai also acquired Pangiam, a developer of AI vision tools, for $70 million in early 2024. Pangiam's CEO Kevin McAleenan, who was the Acting Secretary of the Department of Homeland Security during the first Trump administration, became BigBear.ai's CEO this January. McAleenan's appointment sparked hopes for fresh government contracts -- but its growth rates were still anemic over the past few years.
From 2021 to 2024, BigBear.ai's annual revenue only rose from $146 million to $158 million. Its growth was throttled by the bankruptcy of its top customer Virgin Orbit, competition from other AI companies, and other macro headwinds. If it hadn't acquired Pangiam, its three-year compound annual growth rate (CAGR) would probably be flat or negative.
For 2025, it expects revenue to decline 11%-21% to $125-$140 million. It attributes that slowdown to disruptions in its government contracts, particularly in its programs for the U.S. Army, as the federal government consolidates its data infrastructure. Its backlog also shrank from $385 million in the first quarter of 2025 to $376 million in the third quarter. Its gross margin also fell 240 basis points year over year to 22.8% in the first nine months of 2025. For 2026, analysts expect its revenue to rise 23% to $164 million as it integrates Ask Sage. But for 2027, they expect its revenue to slip 2% to $162 million as it laps that acquisition. It's also expected to stay unprofitable for the foreseeable future. That grim outlook -- along with its increasing dependence on acquisitions -- indicates its core business is struggling to grow.
UiPath's automation business is still booming
UiPath's AI robots can be plugged into an organization's existing software to automate repetitive tasks like onboard customers, processing invoices, inputting data, and sending out mass emails. It's currently the world's largest robotic process automation (RPA) company. According to Grand View Research, the RPA market could expand at a CAGR of 43.9% from 2025 to 2030 as more companies use those robots to cut costs and improve their efficiency. Therefore, UiPath could still have plenty of room to grow -- even as it faces competition from newer generative AI platforms and smaller RPA players like Automation Anywhere.
NYSE: PATH
Key Data Points
From fiscal 2021 to fiscal 2025, which ended this January, UiPath's revenue grew at a CAGR of 24% from $608 million to $1.4 billion. But its growth decelerated in fiscal 2023, fiscal 2024, and fiscal 2025 -- when its revenue rose just 9%.
It mainly attributed that slowdown to the macro headwinds, but it also coincided with the rise of generative AI platforms like ChatGPT. Its abrupt CEO switches -- with its founder and original CEO Daniel Dines bringing in a co-CEO, handing over the reins, then hastily returning after his successor resigned -- exacerbated those uncertainties.
But for fiscal 2026, it expects its revenue to rise 11%-12% to nearly $1.6 billion. That acceleration tells us its core business isn't being rendered obsolete by new generative AI platforms yet. Its new AI tools, which analyze the data processed by its software robots, could increase the stickiness of its ecosystem and widen its moat. Its adjusted gross margin also held steady year over year at 85% in the first nine months of fiscal 2026, and it turned profitable on a generally accepted accounting principles (GAAP) basis.
For fiscal 2027, analysts expect UiPath's revenue and adjusted EPS to rise 9% and 13%, respectively. Its high-growth days might be over, but it's still growing at a healthy rate.
The better buy: UiPath
With enterprise value of $3.1 billion, BigBear.ai isn't cheap at 19 times next year's sales. UiPath, which has an enterprise value of $8.4 billion, trades at just five times next year's sales. Therefore, UiPath's dominance of its niche market, consistent organic growth, rising GAAP profits, and lower valuation all make it a better buy than BigBear.ai right now.
