Many synthetic intelligence (AI) shares skyrocketed over the previous few years as extra corporations embraced AI-powered analytics providers, generative AI platforms, and agentic AI instruments. That increase ought to proceed for the foreseeable future, driving the market’s high AI shares even larger.
But not each AI inventory that glitters is gold. Let’s examine which two AI shares you must keep away from on this wobbly market — and which high-flying AI inventory continues to be value shopping for at this time.
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The 2 AI shares to keep away from: BigBear.ai and C3.ai
BigBear.ai (NYSE: BBAI) and C3.ai(NYSE: AI) each develop AI modules that may be plugged into a corporation’s present software program infrastructure to investigate and automate sure duties.
BigBear.ai’s modules are designed for edge networks, and it generates most of its income from authorities and protection contracts. C3.ai’s modules are designed for a broader vary of computing platforms and serve a extra various mixture of enterprise and authorities shoppers.
From 2021 to 2025, BigBear.ai’s income declined from $146 million to $128 million, whereas its web loss widened from $124 million to $294 million. That decline was brought on by the chapter of its high buyer, Virgin Orbit, competitors from related AI corporations, and fierce macro headwinds. BigBear.ai’s gross sales slumped even after it acquired the AI imaginative and prescient agency Pangiam in 2024, received a number of new authorities contracts, and the broader AI market expanded.
From 2025 to 2027, analysts count on BigBear.ai’s income to develop at a 12% CAGR to $159 million, however most of that progress will come from its current acquisition of the generative AI platform supplier, Ask Sage. With a market cap of $2.1 billion, this lackluster AI inventory nonetheless trades at 15 occasions this 12 months’s gross sales — and it might sink a lot decrease in a messy market downturn.
From fiscal 2022 to fiscal 2025 (which ended final April), C3.ai’s income jumped from $183 million to $389 million, however its web loss widened from $56 million to $289 million. Its high line grew because it launched new generative AI modules, gained extra authorities contracts, and renewed a key three way partnership with Baker Hughes by means of 2028. Nevertheless, its gross margins shrank because it relied extra closely on lower-margin providers and usage-based charges (slightly than its stickier subscriptions) to drive its gross sales. It additionally confronted stiff competitors from related corporations.
From fiscal 2025 to fiscal 2028, analysts count on C3.ai’s income to drop from $389 million to $251 million because it loses floor to its opponents, disrupts its personal gross sales groups with a serious restructuring, and cannibalizes its personal subscriptions with its usage-based plans. With a market cap of $1.3 billion, C3.ai won’t appear costly at 5 occasions this 12 months’s gross sales, however its upside will stay restricted so long as it might probably’t resolve its most urgent issues.
The AI inventory to purchase: Broadcom
Broadcom(NASDAQ: AVGO) sells a wide selection of chips and infrastructure software program. It aggressively expanded each segments with massive acquisitions over the previous decade.
From fiscal 2021 to fiscal 2025 (which ended final November), Broadcom’s income and adjusted earnings earlier than curiosity, taxes, and depreciation (EBITDA) grew at CAGRs of 24% and 27%, respectively. Most of Broadcom’s current progress got here from its gross sales of personalized application-specific built-in circuits (ASICs) for AI purposes. Its high hyperscaler clients — together with Meta and Alphabet — work with the corporate to create personalized ASICs for their very own knowledge facilities to spice up effectivity, lower prices, and curb their long-term dependence on Nvidia‘s GPUs.
In fiscal 2025, its gross sales of AI chips surged 65% to $20 billion, accounting for 31% of its high line and offsetting its slower gross sales of non-AI chips and infrastructure software program. It expects that determine to soar to $60-$90 billion by the tip of fiscal 2027 because the AI market expands.
From fiscal 2025 to fiscal 2028, analysts count on Broadcom’s income and adjusted EBITDA to each develop at a 48% CAGR. Its enterprise worth of $2.1 trillion may appear excessive, nevertheless it nonetheless appears to be like surprisingly low-cost at 18 occasions subsequent 12 months’s adjusted EBITDA. That makes it a significantly better play than C3.ai or BigBear.ai on the continuing AI increase.
Do you have to purchase inventory in BigBear.ai proper now?
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Leo Solar has positions in Meta Platforms. The Motley Idiot has positions in and recommends Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Idiot recommends C3.ai. The Motley Idiot has a disclosure coverage.
