Innodata vs. BigBear.ai: Which AI Play Has More Upside Now?

The artificial intelligence boom has created distinct investment avenues — from foundational data engineering to mission-critical AI platforms for national security. Innodata INOD and BigBear.ai BBAI represent two compelling, yet fundamentally different ways to participate in this trend.

Innodata has emerged as a high-growth data engineering partner to Big Tech and AI model builders, positioning itself as a “picks and shovels” enabler of generative AI. BigBear.ai, by contrast, focuses on mission-ready AI solutions for defense, intelligence, and critical infrastructure, recently expanding through acquisitions to deepen its generative AI capabilities in secure government environments.

Both stocks are tied to powerful secular AI tailwinds. However, their growth profiles, balance sheets, profitability trends and valuation metrics diverge meaningfully. Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one has more upside potential.

Share Price Momentum and Market Sentiment

Over the past six months, INOD stock has gained 11.7%, outperforming the broader S&P 500’s 8.8% rise and sharply contrasting with BBAI’s 28.4% decline. The divergence reflects not only company-specific execution but also investor confidence in visibility, profitability, and capital structure.

INOD Vs BBAI Share Price Performance

Innodata’s recent strength is supported by record third-quarter 2025 results. The company reported third-quarter revenues of $62.6 million, up 20% year over year, with adjusted EBITDA reaching $16.2 million. Management reiterated guidance for 45% or more year-over-year revenue growth in 2025 and anticipates “transformative growth” in 2026 driven by Big Tech expansions and new initiatives.

BigBear.ai, meanwhile, saw third-quarter 2025 revenue decline 20% year over year to $33.1 million, reflecting lower volume on certain Army programs. Gross margin also compressed to 22.4% from 25.9%. While backlog remains sizable at $376 million, the near-term revenue slowdown has pressured investor sentiment.

The Case for Innodata Stock

Innodata’s core strength lies in its role as a mission-critical data engineering partner to frontier AI model builders and enterprises. The company reported revenues of $179.3 million for the first nine months of 2025, up 61% year over year, underscoring accelerating demand for high-quality pre-training and post-training data.

A key growth vector is pre-training data. The company signed contracts it believes could result in approximately $42 million of revenues, with another $26 million expected from pending agreements — a potential $68 million pipeline largely flowing into 2026. This positions Innodata directly within the arms race among major model builders seeking differentiated training corpora.

Innodata is also expanding into federal markets. The newly launched Innodata Federal unit expects its initial high-profile project to generate roughly $25 million, mostly in 2026. The company was recently awarded a prime contract position on the U.S. Missile Defense Agency’s SHIELD IDIQ program and selected by Palantir to support AI-powered deployments. These wins diversify revenue beyond commercial Big Tech clients.

Financially, Innodata is solid. Cash rose to $73.9 million as of Sept. 30, 2025, and third-quarter adjusted EBITDA margin stood at 26%, reflecting operating leverage.

Challenges remain. Revenue concentration among large Big Tech clients poses risk, and management is investing heavily in new capabilities, which could create short-term margin variability. Still, Innodata is already profitable, cash-generative and scaling into multiple high-growth AI verticals.

The Case for BigBear.ai Stock

BigBear.ai is pursuing a platform-led strategy in secure generative AI for defense and national security. The transformational move was its $250 million acquisition of Ask Sage, a generative AI platform supporting over 100,000 users across 16,000 government teams.

This acquisition strengthens BigBear.ai’s positioning in secure AI deployment and orchestration across classified and regulated environments. Additionally, the company acquired CargoSeer technologies to expand AI-powered cargo inspection and trade risk management capabilities, reinforcing its “smart & secure travel and trade” strategy.

On the balance sheet front, BigBear.ai significantly improved liquidity, reporting $456.6 million in cash as of Sept. 30, 2025, and announced plans to reduce convertible debt through redemption and conversions.

However, operational performance remains under pressure. Third-quarter 2025 adjusted EBITDA was negative $9.4 million, and revenue guidance for 2025 stands at $125–$140 million, implying modest 2025 growth at best. Integration risk from recent acquisitions and dependence on government funding cycles add uncertainty.

Valuation Snapshot for INOD & BBAI Stocks

On a forward 12-month price-to-sales basis, Innodata trades at 4.39X, while BigBear.ai trades at 9.95X. Despite BigBear’s weaker growth trajectory and negative EBITDA, it commands a materially higher revenue multiple. Innodata’s lower multiple appears more aligned with its profitable growth profile and clearer earnings visibility.

INOD Vs BBAI Valuation

Earnings Outlook and Estimate Trends: INOD Vs BBAI

Over the past 60 days, the Zacks Consensus Estimate for Innodata’s 2026 earnings per share has remained unchanged at $1.12, implying 27.8% growth from 2025 levels. Revenues are expected to rise 25.9% in 2026.

For BigBear.ai, the consensus mark for 2026 loss implies a narrower loss of 25 cents per share, improving from a 93-cent loss in the prior year. Revenues are projected to grow 30.2% in 2026, partly reflecting the contribution from Ask Sage. However, the company remains in loss territory.

Which AI Stock Has More Upside?

Both Innodata and BigBear.ai are positioned to benefit from expanding AI budgets, particularly in generative AI and federal deployments. BigBear.ai offers high-beta exposure to defense AI spending and platform integration upside, backed by a strengthened balance sheet.

However, Innodata holds the edge today. It combines accelerating organic growth, expanding federal exposure, improving operating leverage, positive earnings, and a significantly lower valuation multiple. With a clearer path to sustained profitability and diversified growth drivers across Big Tech, sovereign AI, enterprise AI, and defense, Innodata appears better positioned for attractive risk-adjusted upside.

Given both stocks carry a Zacks Rank #3 (Hold), Innodata stands out as the more compelling AI play at current levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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