BigBear.ai (BBAI 2.54%) and C3.ai (AI 4.21%) both disappointed a lot of their early investors. BigBear.ai went public by merging with a special purpose acquisition company (SPAC) in December 2021, started trading at $9.84 per share, but now trades at about $6. C3.ai went public at $42 in a traditional IPO in December 2020, but it's now worth roughly $13.
Both companies struggled with slowing sales growth and persistent losses over the past few years. Rising interest rates also compressed their valuations. Should contrarian investors buy either of these out-of-favor AI stocks as a turnaround play? Let's compare their business models, growth rates, and valuations to make an informed decision.
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The similarities and differences between BigBear.ai and C3.ai
BigBear.ai and C3.ai both develop AI modules that can be plugged into an organization's existing software to automate, accelerate, and optimize specific tasks. However, BigBear.ai generates most of its revenue from government and defense contracts. C3.ai serves a broader range of enterprise and government customers.
BigBear.ai directly deploys its modules into edge networks, which sit between central servers and end users. By intercepting that data as it flows between those two points, it can respond faster than locally installed AI services. That edge-centric approach also allows government missions to continue without centralized servers or cloud-based services.
C3.ai also plugs its modules into edge networks, but they usually work in tandem with its locally installed modules. That hybrid approach is generally better suited for its commercial customers.
Which company is growing faster?
From 2021 to 2024, BigBear.ai's revenue grew at an anemic 3% CAGR. It struggled to expand as it grappled with the bankruptcy of its top customer, Virgin Orbit, competition from other similar AI module makers, and other macro headwinds.
If BigBear.ai hadn't acquired the AI vision firm Pangiam in 2024, its three-year CAGR would likely have been flat or negative. For 2025, it expects its revenue to decline another 11%-21% as the federal government reins in its spending and consolidates its data infrastructure. Its gross margin also shrank year over year in the first nine months of 2025, and analysts expect it to stay unprofitable for the foreseeable future.
BigBear.ai's appointment of Kevin McAleenan, who previously served as the Acting Secretary of the Department of Homeland Security (DHS) during the first Trump Administration, as its new CEO last January sparked hopes of new government contracts. However, its new government deals won't significantly boost its revenues and profits over the next few years.
For 2026, analysts expect BigBear.ai's revenue to rise 23% -- but that growth will mostly come from its acquisition of the generative AI platform provider, Ask Sage. They expect its revenue to decline by 2% in 2027 after integrating the acquisition and as its organic growth sputters.
NYSE: BBAI
Key Data Points
From fiscal 2022 to fiscal 2025 (which ended last April), C3.ai's revenue grew at a 15% CAGR. It grew steadily as it rolled out new generative AI modules, secured more federal contracts, signed new strategic partnerships, and renewed its closely watched joint venture with Baker Hughes (BKR 5.04%) through 2028.
However, its gross margins contracted throughout fiscal 2026 as it relied more heavily on lower-margin services to drive its top-line growth. It also remains deeply unprofitable.
For fiscal 2026, C3.ai expects its revenue to decline 26% as it struggles to gain new customers and restructures its sales and marketing team. The macro headwinds also continue to impact its business, even as more companies ramp up their AI spending. For fiscal 2027, they expect its revenue to rise 11% as it stabilizes its sales and marketing efforts -- but it could face fierce macro and competitive headwinds for the foreseeable future.
NYSE: AI
Key Data Points
The valuations and verdict
With an enterprise value of $2.7 billion, BigBear.ai trades at 16 times this year's sales. C3.ai, with an enterprise value of $1.2 billion, trades at just four times this year's sales.
While both of these AI underdogs face tough long-term challenges, it doesn't make much sense for BigBear.ai to trade at a higher valuation than C3.ai, given that it generates less revenue, grows more slowly, and is more heavily dependent on lumpy government contracts. Therefore, C3.ai has a better shot at a turnaround than BigBear.ai, which still seems overvalued based on the belief that McAleenan can bring in more government contracts.
