2Artificial Intelligence (AI) Inventory The US Government is actively supporting it in 2025

Key Points

• Defense Secretary Pete Hegses outlined the vision for the US government to utilize more software across its operations.

• So far, data analytics platforms Palantir Technologies and BigBear.AI have been prominent beneficiaries in the public sector.

• The software from both companies has been deployed to a large number of government agencies, but one of these highly leaps and bounds of AI stocks is seen as a clear winner.

• 10 shares better stocks than Palantir Technologies›

When it comes to artificial intelligence (AI) inventory, investors' thinking could be transformed into semiconductors, large data centers, or cloud computing infrastructure. This is great news for Chip Powerhouse and Hyper Scholars nvidia, Advanced Micro Devices, Broadcom, Taiwan Semiconductor Manufacturing, Microsoft, Amazonor alphabethowever, investors could look down on new opportunities beyond the usual suspects.

Enterprise-grade software becomes an increasingly important layer on the hardware stack. Commercial is the sale of AI-powered software to large companies that span complex needs, spanning data analytics, logistics, human resources, cybersecurity and more.

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However, there are other opportunities outside the private sector. It's how AI is redefineing the US government, one of the biggest and most sophisticated companies of all. Earlier this year, Defense Secretary Pete Hegses announced plans to allocate more spending towards the software acquisition pathway (SWP), the strategy first deployed in 2020.

Let's explore how to do that Palantir Technologies (NASDAQ: PLTR) and bigbear.ai (NYSE: BBAI) It leverages the shift from AI hardware to software and how companies are approaching opportunities with SWP.

1. PalantirTechnologies: US Government AI Darling

Palantir has been at the heart of several notable deals with the federal government throughout 2025. In late May, he deepened his ties with the Department of Defense (DOD) through a $795 million expansion featuring the Maven Smart System (MSS). This brings the MSS program to a total of $1.28 billion, making it a long-term revenue driver. More recently, the company has won up to $10 billion worth of Army contracts over the next decade.

Palantir's victory also surpasses the US military. The company has built an immigrant life cycle operating system, often referred to as immigrants, for immigration and customs enforcement (ICE).

Signing a multi-billion dollar deal will allow Palantir to provide high revenue visibility, keep your customer base sticky and open the door to additional Upsell or Cross-Sell services.

The ability to impose its defence expertise on other government functions will expand the public sector footprint of Palantir and reinforce the breadth of its capabilities.

2. bigbear.ai: Niche players supporting the public sector

Another AI software developer who signed a contract with the US government this year is BigBear.ai. In February, he won a contract with DOD and designed a system to support national security decisions by analyzing trends and patterns in foreign media.

Shortly afterwards, the company won a $13.2 million contract over three and a half years to help staff with unit management and data analysis capabilities.

In May, the company partnered with Hardy Dynamics to promote the Army's use of machine learning and AI for autonomous drones.

Finally, BigBear.AI has signed a contract with the US Customs and Border Protection to deploy a biometric AI infrastructure system called Pangiam, arriving at dozens of major airports in North America, helping to improve security protocols.

Which is better stock: Palantir or bigbear.ai?

Between the two strains, I consider Palantir as a clear choice. Bigbear.ai has proven that it can win meaningful government contracts, but its work is more niche-focused and smaller on scale compared to billion-dollar deals across multiple platforms.

In my view, Bigbear.ai's popularity is largely among retail investors who want it to become the “next Palantir”. Smart investors know that hope is not a real strategy. A careful valuation analysis is necessary to know which stocks are really worth buying, not speculation.

Some people on Wall Street might argue that Palantir stock is cheap based on software-specific metrics such as the 40 rules, but I'm not completely acquired by such a story.

PLTR PS ratio data by YCHARTS.

Traditional approaches to valuation such as price-to-sell ratio (P/s) show that Palantir is the most expensive software stock of the companies on the chart above. That valuation expansion means that the stocks are becoming even more expensive as they continue to gather.

Palantir is an impressive company that proves it can deliver in critical applications, but its inventory is historically expensive. I think investors would be better off waiting for a more reasonable entry point and paying a better price.

Should I invest $1,000 in Palantir Technologies?

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Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia and Palantir Technologies. Motley Fool recommends manufacturing Advanced Micro Devices, Alphabet, Amazon, Datadog, Microsoft, Mongodb, Nvidia, Palantir Technologies, ServiceNow, Snowflake, and Taiwan semiconductor manufacturing. Motley Fool recommends Broadcom and the following options are recommended: A $395 call at Microsoft for January 2026 and a $405 call at short term Microsoft for January 2026. Motley Fools have a disclosure policy.