Better Artificial Intelligence (AI) Stocks for 2026: Palantir vs. BigBear.ai

• Palantir and BigBear.ai want to capitalize on the AI ​​software market. One of them has been considerably more successful at it.

• Palantir’s growth rate could continue to accelerate in 2026, helping it justify its valuation.

• BigBear.ai still has a lot of work to do if it wants to make a dent in the AI ​​software space.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ:PLTR) And BigBear.ai (NYSE: BBAI) specializes in providing artificial intelligence (AI) software solutions to both commercial and government customers. They help their customers integrate different types of generative AI tools into their operations to improve productivity, which is why they are popular among investors this year.

While Palantir’s stock price is up a whopping 146% so far in 2025, BigBear.ai has posted a respectable 50% gain. However, if you want to buy one of these two AI software stocks for your 2026 portfolio, which should it be? Let’s find out.

Palantir is emerging as a leader in the AI ​​software market. The company quickly built a solid customer base that includes both federal and commercial customers. More importantly, Palantir isn’t just bringing in new customers; it also brings in new business from existing customers.

Palantir management highlighted this during the company’s earnings call in November, pointing out that pilot project deals intended to address a single-use case eventually turn into larger and longer contracts. This explains why Palantir has seen an increase in sales and revenue growth in recent quarters.

The company reported a 110% year-over-year increase in adjusted earnings per share in the third quarter to $0.21 per share. That marks a significant acceleration from the 43% year-over-year earnings growth the company reported in the year-ago period. However, this isn’t the only key metric where Palantir experienced substantial acceleration.

Palantir booked $2.76 billion in contracts in the previous quarter, 2.5 times more than the same period last year, when total contract value was up just 33% year over year. These larger contracts create a huge revenue pipeline for Palantir. Residual deal value (RDV) growth of 91% to $8.6 billion eclipsed Palantir’s 63% increase in revenue last quarter. RDV is the total value of unfulfilled contracts at the end of a quarter.

All of this suggests that Palantir appears poised to accelerate into 2026, driven by its revenue shortfall and the new customers it recently acquired. If these customers start deploying Palantir’s AI solutions company-wide, larger deals are likely to be scored next year. Additionally, increased revenue from existing customers should ideally also lead to tremendous bottom line growth, as no additional expenditure needs to be spent on acquiring those customers.

So don’t be surprised if Palantir’s profits grow much faster than the 37% increase that analysts are predicting for 2026, and that could help this generative AI company maintain its impressive stock market momentum into the new year.

BigBear.ai offers AI-powered software solutions such as digital identity management, predictive analytics, threat detection, digital twins and AI model management. The offering is primarily deployed in the government sector in applications such as homeland and border security, defense and intelligence. The company also offers AI solutions for manufacturing, supply chain management and travel operations.

However, the company has struggled despite operating in a fast-growing sector. This is reflected in the 20% year-over-year decline in revenue in the third quarter to $33.1 million. A major reason for the weak performance is BigBear.ai’s dependence on government programs, which may be affected by budget and timing issues.

But the company is trying to turn the tide. It recently announced the acquisition of a fast-growing generative AI software vendor called Ask Sage. This company distributes AI models and helps create agentic AI solutions for defense, security, and other regulated industries. The great thing is that Ask Sage is growing much faster than BigBear.ai.

Annual recurring revenue (ARR) is on track to reach $25 million this year, a sixfold increase from last year. BigBear.ai is paying $250 million for this acquisition, and it could boost the company’s fortunes in the future. But investors should not forget that, unlike Palantir, BigBear.ai has failed to achieve organic growth.

That’s mainly because it relies on government contracts for most of its revenue. Bulls could argue that BigBear.ai had a significant backlog of $376 million at the end of the previous quarter, but only $50 million of that was funded. A massive $273 million of the backlog fell into the category of priced, unexercised options, meaning it can only be recognized as revenue if its clients decide to exercise those contracts.

So BigBear.ai’s future revenue visibility isn’t as solid as Palantir’s. Moreover, operating results are expected to remain in the red through 2026, while revenue growth is expected to be 23%. Palantir, meanwhile, is poised to grow its revenue by 40% through 2026, according to consensus estimates, a number it could surpass thanks to its massive revenue backlog.

Palantir therefore appears to be the better AI stock to buy. However, it is much more expensive than BigBear.ai with a sales multiple of 182. BigBear.ai has a sales multiple of 14, but its revenue is shrinking. Palantir appears better positioned to justify its expensive valuation given its ability to continue accelerating through 2026. That’s why Palantir stock could continue to outperform BigBear.ai in 2026 and remain the better AI choice of the two.

Consider the following before purchasing shares in Palantir Technologies:

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Better Artificial Intelligence (AI) Stock for 2026: Palantir vs. BigBear.ai was originally published by The Motley Fool