The inventory market’s turbulent begin to 2025 stands in sharp distinction to the string of record-breaking highs of 2024. But, traders can discover reassurance within the synthetic intelligence (AI) revolution, which stays in full swing. Breakthroughs in automation and machine learning are proving transformative to the worldwide financial system by empowering companies to realize new ranges of productiveness.
Trade giants usually steal the highlight within the fast-changing world of AI, however the way forward for innovation would possibly hinge on rising disruptors. BigBear.ai (NYSE: BBAI) and Innodata (NASDAQ: INOD) are two small caps leveraging AI-powered purposes into vital long-term alternatives.
With each shares down sharply from their latest highs amid the broader inventory market sell-off, let’s talk about whether or not BigBear.ai or Innodata is the higher AI inventory to purchase proper now.
The place to take a position $1,000 proper now? Our analyst staff simply revealed what they imagine are the 10 finest shares to purchase proper now. Learn More »
Picture supply. Getty Photos.
The case for BigBear.ai
The enchantment of BigBear.ai lies in its pure-play concentrate on synthetic intelligence. It makes a speciality of delivering AI-driven determination intelligence by means of its platform, which extracts insights from huge datasets.
The corporate’s know-how has proved its worth in extremely complicated nationwide safety purposes, profitable main authorities contracts, together with with the Division of Protection. It’s also increasing commercially into provide chains and logistics, in addition to the healthcare and life sciences market.
The corporate’s early management in pc imaginative and prescient may very well be its most fun alternative and key progress driver. Its Pangiam digital id model makes use of photographs and biometrics for real-time risk detection and operational workflows.
Notably, main international airports and the Division of Homeland Safety are present clients, having adopted its Trueface and veriScan programs for safety screening.
For the 12 months ended Dec. 31, 2024, BigBear.ai reported $158 million in income, a modest 2% year-over-year enhance with progress muted by a comparability with the completion of a major 2023 contract. Nonetheless, the corporate’s order backlog is extra promising, surging 150% to $418 million — substantial underlying demand that bolsters its progress trajectory.
Although at the moment unprofitable, the corporate has issued steerage for a narrowing web loss, supported by a steadiness sheet with over $115 million in money. This monetary flexibility permits the corporate to pursue its strategic targets.
Buyers who imagine BigBear.ai continues to be within the early stage of capitalizing on a major alternative could discover the inventory a compelling buy-and-hold prospect for the long term.
The case for Innodata
Innodata has shortly emerged as a pacesetter in a vital side of AI that is usually ignored: information preparation. The corporate’s know-how focuses on gathering, cleansing, and organizing uncooked data, corresponding to textual content, footage, and movies, which is in the end used to coach AI fashions with high-quality enter. This experience has turn out to be more and more necessary in generative AI purposes that require mitigating potential biases inside the information.
With a $1.2 billion market capitalization, Innodata surpasses BigBear.ai’s $900 million valuation. Its energy lies in its strong progress, with 2024 income surging 96% 12 months over 12 months to $171 million, pushed by increasing relationships with “Magnificent Seven” corporations as key clients.
Notably, Innodata achieved profitability in 2024, reporting $28.7 million in web revenue, a major turnaround from the $900,000 loss in 2023. Administration tasks continued progress, concentrating on a 40% or greater income enhance in 2025 alongside rising earnings.
This efficiency signifies that its shares are cheaper than BigBear.ai’s. Buying and selling at 4.8 occasions projected year-ahead gross sales, its ahead price-to-sales ratio (P/S) represents a reduction in comparison with BigBear.ai’s 5.2 a number of.
And Innodata’s ahead price-to-earnings ratio (P/E) of 43 is unquestionably fascinating, if not outright compelling, contemplating its earnings momentum, whereas BigBear.ai continues to be attempting the attain breakeven.
BBAI PS Ratio (Forward) information by YCharts.
Resolution time: The sting goes to Innodata
I am bullish on each BigBear.ai and Innodata, as every possesses distinct strengths that might reward shareholders over the long term. But when compelled to choose only one as the higher AI inventory at present, I imagine Innodata has the sting given its extra confirmed product ecosystem and strong fundamentals.
Till BigBear.ai demonstrates it will probably successfully monetize its increasing order backlog, shares of Innodata ought to proceed to outperform. The inventory is a good possibility for traders looking for small-cap publicity to AI inside a diversified portfolio.
Don’t miss this second probability at a probably profitable alternative
Ever really feel such as you missed the boat in shopping for probably the most profitable shares? Then you definately’ll need to hear this.
On uncommon events, our skilled staff of analysts points a “Double Down” stock advice for corporations that they suppose are about to pop. For those who’re anxious you’ve already missed your probability to take a position, now could be the very best time to purchase earlier than it’s too late. And the numbers converse for themselves:
- Nvidia: should you invested $1,000 once we doubled down in 2009, you’d have $286,347!*
- Apple: should you invested $1,000 once we doubled down in 2008, you’d have $42,448!*
- Netflix: should you invested $1,000 once we doubled down in 2004, you’d have $504,518!*
Proper now, we’re issuing “Double Down” alerts for 3 unimaginable corporations, and there might not be one other probability like this anytime quickly.
*Inventory Advisor returns as of April 1, 2025
Dan Victor has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
