Palantir Technologies (PLTR 0.44%) is one of the greatest success stories on the stock market in recent years. Shares of the secretive data analytics company are up nearly 1,700% since the start of 2023, an incredible feat for a company that had been largely forgotten following a crash after its 2020 IPO and the bear market of 2022.

Palantir's resurgence owes in large part to its Artificial Intelligence Platform (AIP), which launched in 2023. The platform accelerates the power and utility of Palantir's software suite, allowing users to easily find and organize the information they need by using AI agents and a chat-based interface.

The software-as-a-service (SaaS) company benefits from a long history of serving the government, primarily focusing on defense and counterterrorism, which allowed it to hone and improve its product. Since the launch of AIP, its U.S. commercial business soared, showing its technology is gaining adoption among enterprise customers, a huge addressable market for Palantir.

Following in the footsteps of the breakout software stock, other companies are fashioning themselves as the next Palantir. Let's take a look at two of them to see if they're the real deal.

Image source: Getty Images.

1. C3.ai

Like Palantir, C3.ai (AI 1.26%) is an AI-focused SaaS company that gets much of its business from the government. Its main focus is providing AI-based applications that help its customers handle things like demand forecasting and inventory management.

Also like Palantir, C3.ai reported accelerating revenue growth in recent quarters.

PLTR Operating Revenue (Quarterly YoY Growth) data by YCharts

Both companies capitalized on the increasing demand for AI enterprise software, a bullish trend for the sector.

C3.ai also works closely with the Department of Defense. In its most recent quarter, the company announced several new and expansion agreements with the department and branches of the military, such as the Army and Air Force.

The company is also diversifying its revenue in much the same way that Palantir has. For example, over the last year, federal, defense, and aerospace went from 49% of its total bookings to 33.3%, and now trails manufacturing as its largest industry.

C3.ai is much smaller than Palantir, as its revenue is just about a tenth of what Palantir is bringing in. The AI for the Enterprise company is also still unprofitable, while Palantir made the transition to profitability over the last year, with profits soaring. For its fiscal 2025, C3.ai is targeting an adjusted operating loss of $105 million to $135 million, which compares to an adjusted loss of $94.9 million in fiscal 2024, showing that that figure is moving in the wrong direction. However, it does indicate that C3.ai's margins are improving.

2. BigBear.ai

The other Palantir wannabe that got a lot of attention from investors is BigBear.ai (BBAI 0.41%).

BigBear.ai provides a similar service to C3.ai and Palantir, as it offers data analytics software and other AI tools to the Defense Department and other customers. In fact, the stock just soared recently after it won a new government contract.

The company specializes in Edge AI decision intelligence, providing AI software for edge devices that allows its customers to process millions of points of data to make forecasts and find anomalies. It also offers cybersecurity, as well as supply chain and logistics software.

BigBear.ai's revenue growth has been more erratic than that of Palantir and C3.ai, but its most recent report offered investors some encouragement. Revenue in the third quarter increased 22.1% to $41.5 million, following some losses earlier in the year.

Not only is BigBear.ai growing its revenue more slowly than Palantir and C3.ai, but its gross margin is much lower, coming in at just 25.9% in the third quarter. That's unusually low for any SaaS company, which typically relies on high gross margins and then spends most of its revenue on sales and research and development for new products.

BigBear.ai's operating costs are lower than you might expect, however, and the company reported a generally accepted accounting principles (GAAP) operating loss of $10.5 million in the third quarter, which seems reasonable for a company of its size.

Are either of these AI stocks buys?

Of these two stocks, C3.ai looks like the better buy. The company reported seven straight quarters of accelerating revenue growth. It's diversified away from its base serving the federal government and related industries. Its generative AI platform is gaining traction, and it's more than double the size of BigBear.ai based on revenue.

BigBear.ai has potential as well, but its low gross margins seem like a headwind to its growth, as it limits the money it can reinvest in the business and its revenue growth has been more erratic over the last two years.

Both of these AI stocks trade at a price-to-sales ratio of around 12, making them significantly cheaper than Palantir, though Palantir is now solidly profitable.

I wouldn't expect either one of them to approach Palantir's blowout performance over the last two years, but of the two, C3.ai looks like it has a better chance to outperform and deliver multibagging gains.

It's still a high-risk stock, given its lack of profitability, but its accelerating revenue, diversification, and improving margins are all positive signs.