AI Market Soars in 2024: Verizon vs BigBear.ai Analysis

The report highlights the significant growth of the AI market, which surged to $184 billion in 2024. It compares two key players, Verizon Communications and BigBear.ai, assessing their potential investments in the booming AI landscape.

Date: 24-12-2024

AI Rating: 7

The report illustrates a strong upward trend in the artificial intelligence (AI) market, which increased from $136 billion in 2023 to $184 billion in 2024. This growth trend is forecasted to continue, potentially reaching $827 billion by 2030, signaling robust market potential which might positively influence companies such as Verizon Communications and BigBear.ai.

Verizon Communications (NYSE: VZ) is depicted as a mature company positioned strategically within the AI landscape through its extensive 5G network, which facilitates edge computing to mobile devices. Key points impacting investor sentiment include:

Revenue: Verizon reported third-quarter revenue of $33.3 billion, remaining flat year over year, indicating stable sales despite economic challenges.
Net Income: The company achieved a net income of $3.4 billion in the third quarter, highlighting its profitability.
Free Cash Flow (FCF): Its year-to-date free cash flow was $14.5 billion, significantly exceeding its dividend payments of $8.4 billion, ensuring its ability to maintain its dividend.

Given the robust dividend yield of 6.7% and a history of consistent dividend increases over 18 years, Verizon presents itself as a reliable investment option in the AI sector.

On the other hand, BigBear.ai (NYSE: BBAI) occupies a different position in the market. The report notes:

Revenue Growth: BigBear.ai reported third-quarter sales of $41.5 million, representing a 22% year-over-year increase—but this was primarily driven by its acquisition of Pangiam.
Net Income: The company experienced a net loss of $12.2 million in the same quarter, raising concerns about its profitability.
Revenue Decline: In contrast, first-quarter revenue fell by 21% year over year, indicating challenges in its core business despite operating in a booming sector.

This analysis indicates a more cautious outlook for BigBear.ai due to its dependence on government contracts and signs of struggling core revenue. In contrast, Verizon's reliable performance metrics and established market presence render it a more attractive investment option in the face of AI market expansion.

Stocks: VZ BBAI