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AI Stocks BigBear.ai and C3.ai: Growth Challenges Persist

BigBear.ai's and C3.ai's stocks have stumbled, with BigBear.ai now trading at approximately $2 and C3.ai at $19. Both companies face significant operational challenges and market pressures, prompting investors to reconsider their positions in these AI firms.

Date: 
AI Rating:   5

Current Performance Overview

BigBear.ai (NYSE: BBAI) and C3.ai (NYSE: AI) are both in a challenging phase as they navigate the complexities of AI market integration and corporate governance. BigBear.ai has seen a dramatic drop from a SPAC merger opening price of $9.84 to around $2, reflecting dwindling investor confidence. Similarly, C3.ai's decline from an IPO price of $42 to approximately $19 highlights broader market struggles.

Revenue Growth Insights

BigBear.ai initially projected significant revenue growth, aiming to reach $550 million by 2024 but only managed to deliver $158 million in that timeframe. This stagnation is attributed partly to dependencies on high-stakes partnerships, notably with Virgin Orbit, which filed for bankruptcy. Analysts are cautiously optimistic for a projected revenue rise to $170 million for 2025, indicating a slight rebound as new government contracts may materialize under recent leadership changes.

C3.ai exhibited more consistent revenue growth, achieving a 6% rise in fiscal 2023 and a notable 16% increase to $311 million in 2024. However, its net losses are expanding, which raises red flags for investors hoping for profitability.

Profit Margins and Net Income Analysis

BigBear.ai’s net loss has notably worsened, from $124 million in 2021 to $257 million in 2024. However, projections suggest a narrowing of losses to $54 million in 2025. This improvement opens a discussion regarding the effectiveness of its new leadership and potential government contracts.

In contrast, C3.ai's widening net loss from $269 million to $280 million reveals that despite revenue growth, operational expenses tied to expanding its AI solutions remain insurmountable at present. The looming expiration of a significant revenue-generating partnership with Baker Hughes adds further uncertainty.

Conclusion

Given the operational turbulence and significant projected losses for both companies, professional investors may want to approach these stocks cautiously. BigBear.ai’s image may be slightly rehabilitated with new contracts, yet overall, both companies face substantial headwinds that could affect stock performance in the coming months.

Stocks:  BBAI AI