Palantir Technologies was the top-performing stock in the S&P 500 and Nasdaq-100 during the first half of 2025. With shares soaring by 80% through the first six months of the year — and by 427% over the last 12 months — Palantir has helped drive a lot of attention to the intersection of artificial intelligence (AI) and defense contracting.

Palantir is far from the only company seeking to disrupt defense tech. A little-known competitor to the company is BigBear.ai (BBAI -3.35%), whose shares are up by an impressive 357% over the last year.

Could BigBear.ai emerge as the next Palantir? Read on to find out.

BigBear.ai is an exciting company in the world of defense tech, but…

BigBear.ai’s share price volatility so far this year mimics the movements of a rollercoaster. Initially, shares rose considerably shortly following President Donald Trump’s inauguration and the subsequent announcement of Project Stargate — an infrastructure initiative that aims to invest $500 billion into AI projects through 2029.

BBAI data by YCharts

However, these early gains retreated following the Pentagon’s plans to reduce its budget by 8% annually.

While reduced spending from the Department of Defense (DOD) was initially seen as a major blow to contractors such as Palantir and BigBear.ai, the trends illustrated above suggest that shares rebounded sharply — implying that the sell-offs back in February may have been overblown. Why is that?

In my eyes, a major contributor to the recovery in defense stocks came after Defense Secretary Pete Hegseth announced his intentions to double down on a strategy dubbed the Software Acquisition Pathway (SWP).

In reality, the DOD’s budget cuts are focused on areas that are deemed non-essential or inefficient. For example, the Pentagon freed up billions in capital by reducing spend with consulting firms such as Booz Allen Hamilton, Accenture, and Deloitte. In addition, a contract revolving around an HR software system managed by Oracle was also cut.

Under the SWP, it appears that the DOD is actually looking to free up capital in order to double down on more tech-focused initiatives and identify vendors that can actually handle the Pentagon’s sophisticated workflows.

With so much opportunity up for grabs, it’s likely that optimistic investors saw this as a tailwind for BigBear.ai. This logic isn’t too far off base, either.

BigBear.ai’s CEO is Kevin McAleenan, a former government official with close ties to the Trump administration. McAleenan’s strategic relationships within the government combined with the DOD’s focus on working with leading software services providers likely has some investors buying into the idea that BigBear.ai won’t be flying under the radar much longer.

Image source: Getty Images.

…how does the company really stack up beside Palantir?

The graph below breaks down revenue, gross margin, and net income for BigBear.ai over the last year. With just $160 million in sales, the company tends to generate inconsistent gross margins — which top out at less than 30%. Moreover, with a fairly small sales base and unimpressive margin profile, it’s not surprising to see BigBear.ai’s losses continue to mount.

BBAI Revenue (TTM) data by YCharts

By comparison, Palantir generated $487 million in government revenue during the first quarter of 2025. In other words, Palantir’s government operation generates nearly triple the amount of revenue in a single quarter that BigBear.ai does in an entire year. On top of that, Palantir’s gross margins hover around 80%, while the company’s net income over the last 12 months was over $570 million.

Is BigBear.ai stock a buy right now?

Right now, BigBear.ai trades at a price-to-sales (P/S) ratio of around 11. While this may look “cheap” compared to Palantir’s P/S multiple of 120, there is a reason for the valuation disparity between the two AI defense contractors.

Palantir boasts large, fast-growing public and private sector businesses that command strong profit margins. By contrast, BigBear.ai is going to have a difficult time scaling so long as it keeps burning through heaps of cash.

Not only would I pass on BigBear.ai stock, but I also do not see the company becoming the next Palantir. Palantir is in a league of its own in the defense tech space, and I do not see BigBear.ai as a formidable challenger.

Microsoft has just signed a deal with Vaulted Deep, paying it to remove 4.9 million metric tons of waste over 12 years sourced from manure, sewage, and agricultural byproducts for injection deep underground. According to Inc., the current cost of CO2 removal with the company is $350 per ton. If you multiply that by Microsoft’s contract, that makes it worth more than $1.7 billion. However, neither entity has disclosed the actual terms of the deal, and its CEO, Julia Reichelstein, says that the company expects its costs to drop over time, and that the mentioned price isn’t the actual sum that the tech giant paid.

This isn’t the first time Redmond has paid another company to help offset its greenhouse gas emissions; Microsoft signed a deal with AtmosClear in April of this year to sequester 6.75 million metric tons of carbon dioxide. However, Vaulted’s technique is unique — instead of extracting carbon dioxide from the air or electricity production, it collects organic waste. It combines it into a thick slurry, which is then injected about 5,000 feet underground. This prevents them from being dumped at a waste disposal site, where they would eventually decompose and release carbon dioxide into the atmosphere.

For a few years now, the artificial intelligence (AI) movement has largely hinged on the performance of a single company: Nvidia (NVDA -0.42%).

Sure, if Microsoft or Amazon posted strong results from their respective cloud computing platforms or if Tesla managed to hype investors up over the prospects of self-driving robotaxis or humanoid robots, the technology sector might see a fleeting upward movement. At the end of the day, however, the focus seemed to eventually return to Nvidia — with analysts obsessing over how demand for the company’s chips and data center services were trending.

During the first half of the year, Nvidia’s ship was caught in an epic storm. Investors started to question the company’s long-growth prospects — inspiring prolonged periods of panic-selling in the process. All told, Nvidia’s market cap dropped by more than $1 trillion.

But now, with a market value north of $4 trillion, Nvidia has reclaimed its position as the most valuable company on the planet. Even better? Some on Wall Street are calling for further gains of up to 400%.

Let’s explore the tailwinds supporting Nvidia’s long-term growth narrative and detail why Wall Street sees such massive upside for the king of the chip realm.

One Wall Street analyst is calling for a $10 trillion valuation for Nvidia

One of the most bullish Nvidia analysts on Wall Street is the I/O Fund’s Beth Kindig. Kindig suggested that Nvidia could reach a $10 trillion market cap by 2030 — implying 140% upside from current levels. Let’s explore the main catalysts supporting Kindig’s forecast.

According to management from Microsoft, Amazon, and Alphabet, roughly $260 billion will be spent in 2025 alone on AI infrastructure. On top of that, Meta Platforms is expected to spend roughly $70 billion on capital expenditures this year — nearly double what it spent in 2024. Lastly, Oracle is beginning to make significant headway in infrastructure services — allowing companies to rent Nvidia GPUs from their cloud-based data center platform. From a macro perspective, rising capex from the cloud hyperscalers bodes well for chip demand.

Kindig takes these secular tailwinds one step further, suggesting that competition from Intel and Advanced Micro Devices does not pose much of a threat to Nvidia’s dominance. While it’s hard to know how vendor preferences could change over the next several years, current industry research trends suggest that Kindig might be right — underscored by Nvidia’s rising market share in the AI accelerator industry.

The area of Kindig’s analysis that I think is currently overlooked the most revolves around Nvidia’s software architecture, called CUDA. Since CUDA is integrated tightly with Nvidia’s hardware, developers essentially become locked into the company’s ecosystem.

Not only does this lead to customer stickiness, but it opens the door for Nvidia to be at the forefront of more sophisticated, evolving AI applications in areas such as robotics and autonomous driving.

What about $20 trillion?

Former management consulting executive Phil Panaro is even more bullish than Kindig. By 2030, Panaro thinks Nvidia’s share price could reach $800 — implying roughly a $20 trillion market cap.

Panaro cites opportunities across Web3 development and evolving use cases around how enterprises and governments leverage AI to generate more efficiency and cost savings as the main pillars supporting Nvidia’s upside.

While these trends could eventually drive significant demand for Nvidia’s data center services, tech adoption within the government tends to move slowly. Meanwhile, Web3 remains an emerging concept that could take far longer to mature than Panaro is assuming.

Is Nvidia stock a buy right now?

Nvidia stock has been mounting an epic comeback over the last couple of months. This valuation expansion can be easily seen through the dynamics of the company’s rising forward price-to-earnings (P/E) multiple. Nevertheless, Nvidia’s forward P/E of 40 is still well below levels seen earlier this year.

NVDA PE Ratio (Forward) data by YCharts

Trying to model Nvidia’s peak valuation is an exercise in false precision. The bigger takeaway is that analysts on Wall Street are not only calling for significant upside in the stock, but they have outlined the foundation for Nvidia’s long-term growth. The important theme here is that Nvidia has opportunities well beyond selling chips — many of which have yet to make meaningful contributions to the business.

I see Nvidia stock as a no-brainer. Investors with a long-run time horizon might consider scooping shares up at current prices and plan to hold on for years to come.