The Next Palantir? AI Stock to Buy BEFORE Explosive Growth!

About this video

• Video Title: The Next Palantir? AI Stock to Buy BEFORE Explosive Growth!
• Channel: Everything Money
• Speakers: Not specified in the transcript
• Duration: 18:25

Overview

This video discusses whether the AI defense stock, Big Bear AI (BB AI), could be the next Palantir. It analyzes Palantir's past success and then delves into Big Bear AI's current situation, examining its contracts, diversification efforts, leadership, stock performance, competition, and financials. The video emphasizes a value investing approach, urging viewers to focus on fundamentals and price rather than hype.

Key takeaways

• Palantir's Success: Palantir's stock saw a significant increase, turning early investors into millionaires, which has led to a search for similar opportunities. The video attributes Palantir's rise to government contracts, corporate diversification, cutting-edge AI tools, and strong partnerships.
• Introducing Big Bear AI (BB AI): The video identifies Big Bear AI as a smaller company in the AI and defense space that analysts are watching. It highlights BB AI's significant government contracts, including a $165 million deal with the US Army and a $13 million agreement with the Department of Defense, contributing to a $380 million backlog.
• Diversification and New Leadership: Big Bear AI is expanding beyond defense by acquiring Pangium, gaining capabilities in biometrics and facial recognition. The appointment of Kevin McAllin, former acting secretary of Homeland Security, as CEO in 2025 is seen as a positive move, bringing experience and relationships within the federal government.
• Financial Analysis and Concerns: The video notes that BB AI's free cash flow is greater than its net income, common in software companies. However, it highlights concerns such as a flat revenue trend over the past few years, a low gross margin compared to Palantir, and significant share dilution, where the number of outstanding shares has tripled while revenue only increased threefold, negating ownership gains for early investors.
• Valuation and Investment Strategy: The video cautions against chasing hype and emphasizes the importance of understanding a stock's true value. It contrasts BB AI's price-to-sales ratio with Palantir's, noting that even with a lower price-to-sales, BB AI's flat revenue growth is a concern. The video advocates for a value investing approach, focusing on fundamentals and identifying potential risks like dilution and execution challenges.