Better Artificial Intelligence Stock: Verizon vs. BigBear.ai

The artificial intelligence (AI) market has witnessed remarkable growth, reaching $184 billion in 2024 from $136 billion in 2023, and is projected to reach $827 billion by 2030. Two companies positioned to capitalize on this growth are Verizon Communications (VZ) and BigBear.ai (BBAI). This article compares these two stocks, focusing on their AI strategies, financial performance, and investment potential.

Verizon, a mature company with a reliable but slow-growing sales history, leverages its 5G network to bring AI to mobile devices through edge computing. Its partnership with Nvidia enables AI deployment to the edge, requiring a fast and reliable network connection and strong security. Verizon's new AI edge capabilities are set to be demonstrated to businesses in 2025.

BigBear.ai, a younger company that went public in December 2021, focuses on data analysis and decision-making for the U.S. government. Its primary revenue comes from federal government contracts, with a focus on data analysis and decision-making. While BigBear.ai's AI focus is promising, its core business struggles, with Q1 2024 sales down 21% year-over-year (YoY).

Verizon's dividend yield of 6.7% and consistent sales growth make it an attractive investment for income-oriented investors. Its robust dividend history, with 18 consecutive years of increases, demonstrates reliability. Verizon's steady sales and profits, along with strong free cash flow, ensure dividend coverage. In contrast, BigBear.ai's potential for growth and profitability in the AI market is uncertain, with a net loss in the third quarter.

Verizon's lower price-to-sales ratio (P/S) of 1.54 compared to BigBear.ai's 12.55 indicates it's the better value. Despite Verizon's slower growth, its reliable dividend and edge computing opportunities offer potential for share price appreciation. BigBear.ai's core business struggles, making Verizon the better long-term AI investment.

Verizon's 5G network and edge computing capabilities are key drivers of its dividend reliability and steady sales. The company's partnership with Nvidia enables AI deployment to mobile devices, a significant market opportunity. Verizon's robust dividend, yielding 6.7%, has been raised for 18 consecutive years, demonstrating its reliability. The company's steady sales and profits, with $33.3 billion in revenue and $3.4 billion in net income in Q3 2024, further support its dividend. Verizon's strong free cash flow (FCF) of $14.5 billion year-to-date ensures its dividend payments, which totaled $8.4 billion over the same period.



Verizon's dividend history and consistent free cash flow make it a more reliable investment compared to BigBear.ai. Verizon has raised dividends for 18 consecutive years, even during the pandemic, demonstrating its financial stability. In 2024, Verizon's dividend yield was 6.7%, and its year-to-date free cash flow of $14.5 billion comfortably covered dividend payments of $8.4 billion. In contrast, BigBear.ai is not profitable, with a third-quarter net loss of $12.2 million, and its sales growth primarily came from an acquisition, suggesting its core business is struggling.

In conclusion, Verizon's reliable dividend, steady sales, and edge computing opportunities make it the better long-term AI investment compared to BigBear.ai. While BigBear.ai's AI focus is promising, its core business struggles, and its financial performance is uncertain. Investors seeking exposure to the AI market should consider Verizon's strong fundamentals and growth potential in edge computing.