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BigBear.ai vs. Palantir: Which Defense AI Stock Is the Better Choice?
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Key Takeaways
Palantir posted 93% revenue growth in Q2, with U.S. government revenues rising 90%.
BigBear.ai grew revenues 13% and backlog to $270 million, but adjusted EBITDA remained negative.
Palantir raised 2026 revenue guidance to $8.15-$8.158B and sees $4.5-$4.7B in adjusted free cash flow.
The rapid adoption of artificial intelligence across defense and national security is creating new opportunities for companies that can turn complex data into actionable intelligence. Against this backdrop, BigBear.ai Holdings, Inc. (BBAI - Free Report) and Palantir Technologies Inc. (PLTR - Free Report) are emerging as notable names in defense-focused AI, with both companies providing technology designed to support mission planning, decision-making and operational efficiency.
BigBear.ai is expanding its AI capabilities across defense, intelligence and homeland security, while Palantir continues to benefit from strong demand for the AI-powered data and analytics platforms, particularly from U.S. government customers. With differing scales, growth profiles and approaches to the defense AI opportunity, comparing the two stocks offers investors a closer look at their respective strengths and challenges.
The Case for BigBear.ai
BigBear.ai delivered encouraging operational progress in the second quarter, with revenues rising 13% year over year to $36.7 million and gross margin expanding 781 basis points to 32.8%. The company also secured more than 20 new contracts during the quarter, while backlog increased to $270 million, up about $22 million from the start of the year. Management said it remains on track to achieve the 2026 revenue guidance of $135 million to $165 million.
However, profitability remains a significant concern. Adjusted EBITDA was negative $11.6 million in the quarter, compared with negative $8.5 million a year earlier, as BigBear.ai increased spending on sales, go-to-market activities and research and development. Despite the improved gross margin, higher operating investment shows the company has yet to translate its growth initiatives into stronger underlying earnings.
BigBear.ai’s strategy also relies heavily on continued investment and acquisitions to accelerate growth. Management said it intends to pursue additional M&A and described the current environment as a time to be aggressive, while noting that cash reserves will be deployed carefully. Although the company had $410 million in cash and investments at the end of the quarter, using that capital for acquisitions introduces execution and integration risks, particularly after the company recently integrated Ask Sage and CargoSeer.
Another challenge is that the company is competing in markets where scaling deployments remains critical. BigBear.ai highlighted promising applications in generative AI, cargo inspection and drone orchestration, but several of these opportunities are still being developed or expanded across customer environments. The company is positioning its products for large defense, security and trade markets, yet converting these opportunities into sustained, high-margin revenues will be important for validating the growth strategy.
The Case for Palantir
Palantir delivered exceptional growth in the second quarter, with revenues surging 93% year over year to $1.94 billion. The company’s U.S. business remained the key growth engine, with revenue increasing 115%, while U.S. government revenues climbed 90%. Strong demand also drove $3.4 billion in total contract bookings, up 49% year over year, underscoring continued customer adoption of its AI platform across government and commercial markets.
The company’s defense AI opportunity is supported by deepening adoption of its platforms within the U.S. government. Palantir said its Maven platform now has more than 25,000 builders, including service members, government personnel, contractors and companies. A government program of record also selected Maven as its operating platform, highlighting the expanding role of Palantir’s technology in mission-critical defense applications.
Palantir’s financial performance provides another important strength. Adjusted free cash flow reached $1.22 billion in the quarter, representing a 63% margin, while adjusted operating margin stood at 62%. The company also ended the quarter with $9.2 billion in cash, cash equivalents and short-term U.S. Treasury securities. Management raised its full-year 2026 revenue guidance to $8.15-$8.158 billion and expects adjusted free cash flow of $4.5-$4.7 billion.
Despite these strengths, Palantir’s rapid expansion comes with elevated expectations. The company plans to continue investing heavily in its AI platform and technical talent, with adjusted expenses already rising 37% year over year in the second quarter. Management also expects a significant expense increase in the third quarter. With growth expectations exceptionally high, maintaining the current pace of expansion while sustaining profitability will be an important test for Palantir.
How Does the Zacks Consensus Estimate Compare for BBAI & PLTR?
The Zacks Consensus Estimate for BBAI’s 2026 sales implies year-over-year growth of 15.1%. The consensus loss per share estimate is 27 cents, compared with a loss of 82 cents in the prior-year quarter. However, loss estimates for 2026 have widened over the past 30 days.
Image Source: Zacks Investment Research
For PLTR, the Zacks Consensus Estimate for 2026 sales and EPS indicates year-over-year growth of 81.8% and 113.3%, respectively. Earnings estimates for 2026 have also moved higher over the past 30 days.
Image Source: Zacks Investment Research
Stock Performance
PLTR stock has gained 28.4% over the past six months, easily beating the S&P 500’s 11.9% advance. Meanwhile, BBAI’s shares have fallen 25.6% during the same period.
Image Source: Zacks Investment Research
Valuation Check
BBAI is trading at a forward 12-month price-to-sales ratio of 9.24X, below its one-year median of 12.81X. PLTR’s forward sales multiple is 42.94X, slightly below its one-year median of 45.90X.
P/S (F12M)
Image Source: Zacks Investment Research
End Notes
PLTR currently looks like the better defense AI investment because its growth is backed by strong customer adoption, government demand, profitability and cash generation, while BBAI is still working toward sustainable profitability. BigBear.ai has promising opportunities in defense and generative AI, but the ongoing losses, acquisition strategy and execution risks make it more speculative. Palantir has already established a strong position with U.S. government customers and is expanding its AI platforms across mission-critical defense applications.
While PLTR’s valuation is higher, its premium is supported by stronger fundamentals and execution. Its Zacks Rank #2 (Buy), compared with BBAI’s Zacks Rank #4 (Sell), further favors Palantir. Overall, PLTR offers the stronger combination of growth, profitability and financial stability.
View the Zacks #1 Rank List
Image: Bigstock
BigBear.ai vs. Palantir: Which Defense AI Stock Is the Better Choice?
Key Takeaways
The rapid adoption of artificial intelligence across defense and national security is creating new opportunities for companies that can turn complex data into actionable intelligence. Against this backdrop, BigBear.ai Holdings, Inc. (BBAI - Free Report) and Palantir Technologies Inc. (PLTR - Free Report) are emerging as notable names in defense-focused AI, with both companies providing technology designed to support mission planning, decision-making and operational efficiency.
BigBear.ai is expanding its AI capabilities across defense, intelligence and homeland security, while Palantir continues to benefit from strong demand for the AI-powered data and analytics platforms, particularly from U.S. government customers. With differing scales, growth profiles and approaches to the defense AI opportunity, comparing the two stocks offers investors a closer look at their respective strengths and challenges.
The Case for BigBear.ai
BigBear.ai delivered encouraging operational progress in the second quarter, with revenues rising 13% year over year to $36.7 million and gross margin expanding 781 basis points to 32.8%. The company also secured more than 20 new contracts during the quarter, while backlog increased to $270 million, up about $22 million from the start of the year. Management said it remains on track to achieve the 2026 revenue guidance of $135 million to $165 million.
However, profitability remains a significant concern. Adjusted EBITDA was negative $11.6 million in the quarter, compared with negative $8.5 million a year earlier, as BigBear.ai increased spending on sales, go-to-market activities and research and development. Despite the improved gross margin, higher operating investment shows the company has yet to translate its growth initiatives into stronger underlying earnings.
BigBear.ai’s strategy also relies heavily on continued investment and acquisitions to accelerate growth. Management said it intends to pursue additional M&A and described the current environment as a time to be aggressive, while noting that cash reserves will be deployed carefully. Although the company had $410 million in cash and investments at the end of the quarter, using that capital for acquisitions introduces execution and integration risks, particularly after the company recently integrated Ask Sage and CargoSeer.
Another challenge is that the company is competing in markets where scaling deployments remains critical. BigBear.ai highlighted promising applications in generative AI, cargo inspection and drone orchestration, but several of these opportunities are still being developed or expanded across customer environments. The company is positioning its products for large defense, security and trade markets, yet converting these opportunities into sustained, high-margin revenues will be important for validating the growth strategy.
The Case for Palantir
Palantir delivered exceptional growth in the second quarter, with revenues surging 93% year over year to $1.94 billion. The company’s U.S. business remained the key growth engine, with revenue increasing 115%, while U.S. government revenues climbed 90%. Strong demand also drove $3.4 billion in total contract bookings, up 49% year over year, underscoring continued customer adoption of its AI platform across government and commercial markets.
The company’s defense AI opportunity is supported by deepening adoption of its platforms within the U.S. government. Palantir said its Maven platform now has more than 25,000 builders, including service members, government personnel, contractors and companies. A government program of record also selected Maven as its operating platform, highlighting the expanding role of Palantir’s technology in mission-critical defense applications.
Palantir’s financial performance provides another important strength. Adjusted free cash flow reached $1.22 billion in the quarter, representing a 63% margin, while adjusted operating margin stood at 62%. The company also ended the quarter with $9.2 billion in cash, cash equivalents and short-term U.S. Treasury securities. Management raised its full-year 2026 revenue guidance to $8.15-$8.158 billion and expects adjusted free cash flow of $4.5-$4.7 billion.
Despite these strengths, Palantir’s rapid expansion comes with elevated expectations. The company plans to continue investing heavily in its AI platform and technical talent, with adjusted expenses already rising 37% year over year in the second quarter. Management also expects a significant expense increase in the third quarter. With growth expectations exceptionally high, maintaining the current pace of expansion while sustaining profitability will be an important test for Palantir.
How Does the Zacks Consensus Estimate Compare for BBAI & PLTR?
The Zacks Consensus Estimate for BBAI’s 2026 sales implies year-over-year growth of 15.1%. The consensus loss per share estimate is 27 cents, compared with a loss of 82 cents in the prior-year quarter. However, loss estimates for 2026 have widened over the past 30 days.
Image Source: Zacks Investment Research
For PLTR, the Zacks Consensus Estimate for 2026 sales and EPS indicates year-over-year growth of 81.8% and 113.3%, respectively. Earnings estimates for 2026 have also moved higher over the past 30 days.
Image Source: Zacks Investment Research
Stock Performance
PLTR stock has gained 28.4% over the past six months, easily beating the S&P 500’s 11.9% advance. Meanwhile, BBAI’s shares have fallen 25.6% during the same period.
Image Source: Zacks Investment Research
Valuation Check
BBAI is trading at a forward 12-month price-to-sales ratio of 9.24X, below its one-year median of 12.81X. PLTR’s forward sales multiple is 42.94X, slightly below its one-year median of 45.90X.
P/S (F12M)
Image Source: Zacks Investment Research
End Notes
PLTR currently looks like the better defense AI investment because its growth is backed by strong customer adoption, government demand, profitability and cash generation, while BBAI is still working toward sustainable profitability. BigBear.ai has promising opportunities in defense and generative AI, but the ongoing losses, acquisition strategy and execution risks make it more speculative. Palantir has already established a strong position with U.S. government customers and is expanding its AI platforms across mission-critical defense applications.
While PLTR’s valuation is higher, its premium is supported by stronger fundamentals and execution. Its Zacks Rank #2 (Buy), compared with BBAI’s Zacks Rank #4 (Sell), further favors Palantir. Overall, PLTR offers the stronger combination of growth, profitability and financial stability.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.