As investors prepare for the financial landscape of 2026, it is essential to consider not only potential acquisitions but also the sale of stocks that may have peaked. Among the popular artificial intelligence (AI) stocks, Palantir (PLTR) and BigBear.ai (BBAI) are highlighted as candidates for divestment. Analysts warn that these companies may face unrealistic expectations as they head into the new year, potentially disappointing shareholders.
Palantir, known for its AI-powered data analytics software, has seen remarkable demand among both commercial and government clients. In the third quarter of 2025, the company reported a staggering 63% year-over-year revenue increase, with a profit margin of 40%. However, the stock has surged to levels that many consider unsustainable, trading at an eye-watering 259 times forward earnings and 123 times sales, raising concerns about its valuation.
Despite the impressive business performance, analysts caution that the stock price may have outpaced reality. For instance, Nvidia, a key player in the AI sector, has experienced revenue growth at a similar rate of 62% in the same quarter but trades at only 39 times forward earnings and 24 times sales. This disparity suggests that investors pay significantly more for Palantir than for other comparably performing companies.
Market analysts project a slowdown in Palantir’s revenue growth, forecasting an anticipated 41% growth rate for 2026, down from 54% in 2025. The stock is currently priced for perfection, leading to fears that any deviation from expected performance could lead to a significant decline in share value. Given these factors, selling now to lock in profits appears prudent.
Similarly, BigBear.ai presents a contrasting picture. The smaller AI firm, which specializes in custom software solutions for the U.S. government and related sectors, is facing challenging circumstances. Despite the growing demand for AI solutions, BigBear.ai reported a troubling 20% decline in revenue year-over-year in Q3. This marks the second consecutive quarter of revenue decline, raising alarms about the company’s future in the rapidly evolving AI market.
The lack of growth is striking, especially during a time when many companies are capitalizing on the surge in generative AI technology. BigBear.ai’s recent acquisition of Ask Sage, a platform focused on generative AI for sensitive information, may not be sufficient to reverse its fortunes. Compounding these challenges is the recent announcement from the U.S. Department of Defense regarding a new AI tool, GenAI.mil, which BigBear.ai failed to secure, losing out to Alphabet’s Gemini model.
This string of disappointments highlights the struggles of BigBear.ai within a competitive landscape filled with flourishing AI stocks. Given its ongoing revenue challenges and increasing competition, selling BigBear.ai may be the most viable option for investors seeking to reposition their portfolios.
As 2026 approaches, it is crucial for investors to evaluate their holdings critically. While both Palantir and BigBear.ai have shown potential in the AI space, current valuations and market conditions suggest that moving on from these stocks could be a more strategic approach. The focus should shift toward more promising opportunities in an industry that continues to evolve at an unprecedented pace.
For more information on Palantir, visit Palantir’s official site. To learn about BigBear.ai, refer to BigBear.ai’s website. Additionally, details regarding Nvidia can be found at Nvidia’s site, and Alphabet’s developments are available at Alphabet’s main page.
See also
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AI Disruption: How 2026 Will Redefine Leadership, Workspaces, and Customer Engagement
AI Faces Scrutiny as Companies Demand Clear Returns Amidst Performance Gaps, PwC Warns
