Everybody knows that artificial intelligence (AI) requires a lot of data to operate. That's why the recent boom in AI spending has benefited businesses that make data processing chips, data storage devices, and data center equipment.
But all the AI data in the world is useless if you can't access it. That's why you may want to forget BigBear.ai (BBAI 2.54%) and check out IBM (IBM 0.48%), especially now that IBM is purchasing Confluent (CFLT 0.15%), a cloud platform that's quietly becoming mission-critical for Fortune 500 AI workloads.
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BigBear.ai serves a vital AI niche
Right now, BigBear.ai provides AI applications for government, defense, and security systems. One of its biggest products is TrueFace, an AI-powered facial recognition platform that scans a person's face in real time and instantly checks it against a database of known photos. Another product is ConductorOS, which provides secure edge computing services in remote locations.
These platforms are quality products and absolutely necessary for their users. Trueface is used at airport security checkpoints and other ports of entry to check travelers' faces against databases of known criminals and suspected terrorists. According to BigBear.ai management, Trueface boasts a 99.1% success rate against a database of 12 million identities and performs its scans in as fast as two milliseconds.
Meanwhile, ConductorOS provides AI-powered security for edge systems and devices, making it possible for military personnel in remote locations to verify that their communications are both secure and accurate. No wonder the U.S. Department of Defense and the U.S. intelligence community are two of BigBear.ai's biggest clients.
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But it is still a small niche
BigBear.ai is a very important company in its niche. The problem for BigBear is that the niche is too narrow.
Most corporations -- the ones spending big money on AI right now -- don't really have a need for AI-powered facial recognition scanners for entry-point security, because of their minimal physical footprint. While positive 1:1 facial recognition matching software would certainly make an office building more secure, most businesses don't need to make a massive investment in facial recognition hardware and software when a simple employee ID card will do the trick.
Likewise, most businesses aren't making critical communications from the middle of a battlefield with no Wi-Fi: They're using a work computer or computer platform that is generally already running security software. This limits BigBear's ability to find additional customers for its products beyond U.S. government entities.
That lack of a market for its niche solutions is one big reason why BigBear.ai's revenue growth has been lagging behind other AI companies. Peer Palantir Technologies, for example, has seen its trailing-12-month (TTM) revenue skyrocket 125% over the last three years. BigBear.ai's, on the other hand, has fallen 10.3%. Small wonder BigBear.ai's stock trades down 42% over the past year alone.
NYSE: BBAI
Key Data Points
With Confluent, IBM has something for everyone
While BigBear.ai struggles to grow its customer base, Confluent has been growing both its user base and its average user spend across many industries.
That's likely due in large part to the large amount of data used by AI systems. Confluent's cloud-based data streaming platform allows faster access to and transfer of data than traditional retrieval models. That helps AI platforms function more efficiently and helps users maintain access to real-time data. This is a big reason why IBM announced in December that it was paying a premium to acquire Confluent. Since the announcement, Confluent's shares have remained static at just below the deal price of $31 per share, but IBM's stock price has slipped 26%.
Even before the Confluent purchase, IBM was already a major player in cloud computing infrastructure. It has also made extensive investments in AI. The company received 912 patents for generative AI in 2025 alone. Its large suite of products, now augmented by Confluent's offerings, make IBM a much better AI play than BigBear.ai.
