Contrarian AI Stock Opportunities: C3.ai vs. BigBear.ai in a Volatile Market

In a market where AI stocks face headwinds from macroeconomic uncertainty and sector-wide profit warnings, contrarian investors are scouring for undervalued opportunities. Two names that stand out-C3.ai (AI) and BigBear.ai (BBAI)-offer contrasting narratives. While both have struggled with revenue declines in 2025, their divergent strategies, financial health, and growth catalysts present a compelling case for a nuanced investment decision.

Financial Performance: A Tale of Two Downturns

BigBear.ai's Q2 2025 revenue fell to $32.5 million, an 18% drop from $39.8 million in 2024, driven by federal budget cuts impacting its government contract-heavy business, according to a Motley Fool analysis. Meanwhile, C3.ai's fiscal Q1 revenue slid to $70.3 million from $87.2 million, reflecting challenges in sales execution after the departure of CEO Tom Siebel, as detailed in a TS2.Tech article.

Despite these setbacks, BigBear.ai's stock has surged 80–100% year-to-date, trading at a lofty 13× projected 2025 sales, while C3.ai's shares have plummeted nearly 50% as reported by TS2.Tech. This divergence highlights a key contrarian question: Is BigBear's rally already pricing in too much optimism, or does C3.ai's recent strategic pivot offer a more sustainable path to growth?

Strategic Moves: Defense Partnerships vs. Enterprise Diversification

BigBear.ai's recent momentum stems from high-profile defense contracts. Its partnership with Tsecond to integrate ConductorOS with ruggedized hardware for U.S. tactical forces sparked a 22% single-day stock surge in October, according to TS2.Tech. Additionally, the deployment of its veriScan facial recognition system at Chicago O'Hare International Airport-cutting processing times from 60 seconds to 10-signals growing traction in critical infrastructure, as noted by TS2.Tech. However, these gains come amid a $228.6 million net loss in Q2, largely due to a goodwill impairment charge, per TS2.Tech.

C3.ai, by contrast, has focused on enterprise diversification. In Q3 2025, the company reported 26% year-over-year revenue growth, driven by 28 new Microsoft partnerships across nine industries and 20 generative AI pilots with clients like Mars and the U.S. Department of Defense, according to a C3.ai announcement. Its collaboration with McKinsey & Company and AWS has expanded its qualified opportunity pipeline by 244% year-over-year, as the company said in that announcement. This broad customer base-spanning manufacturing, energy, and healthcare-reduces reliance on government contracts, a vulnerability for BigBear.ai as discussed in the Motley Fool analysis.

Analyst Perspectives: Cautious Optimism vs. Profitability Concerns

Analysts remain divided. BigBear.ai carries a "Hold" consensus rating, with a $6 price target below its current $7.05 level, reflecting skepticism about its ability to sustain profitability, TS2.Tech reported. The company's $390 million cash position and $380 million contract backlog offer some comfort, but its 7.55% institutional ownership and recent insider selling by CFO Sean Ricker raise red flags, per the Motley Fool analysis.

C3.ai's new CEO, Stephen Ehikian, faces a steep uphill battle. While the company's generative AI innovations-such as its time series embedding model for sensor data-show promise, the firm noted in its fiscal announcement, analysts project a full-year 2025 loss of -$1.33 per share according to Yahoo Finance. However, C3.ai's diversified revenue streams and strategic alliances with tech giants like Microsoft may provide a stronger foundation for long-term growth, as TS2.Tech has observed.

Contrarian Take: Balancing Risk and Reward

For contrarian investors, the key lies in assessing which company is more likely to reverse its fortunes. BigBear.ai's stock has already priced in aggressive optimism, with its valuation implying a rapid return to profitability that may not materialize, TS2.Tech argues. Conversely, C3.ai's recent partnerships and product innovations suggest a path to regaining momentum, albeit with near-term risks tied to leadership transitions and market conditions, as detailed in the C3.ai announcement.

The One Big Beautiful Bill Act, which boosted funding for the Department of Homeland Security-a key BigBear client-could provide a near-term tailwind, per TS2.Tech. Yet, C3.ai's enterprise diversification offers a more resilient model in a market where government spending cycles are increasingly unpredictable, as noted by TS2.Tech.

Conclusion

In a volatile AI sector, both C3.ai and BigBear.ai present risks and rewards. BigBear's defense-focused growth story is compelling but comes with high valuation and profitability hurdles. C3.ai, despite its recent struggles, offers a more diversified approach and strategic alliances that could drive sustainable growth. For contrarians willing to bet on long-term value over short-term hype, C3.ai's recent momentum and broader ecosystem may prove the more attractive play.