Is BigBear.ai Stock a Buy?

BigBear.ai‘s (NYSE: BBAI) stock has struggled since the company’s public debut on Dec. 8, 2021. The artificial intelligence (AI) software company went public by merging with a special purpose acquisition company (SPAC), and its shares opened at $9.84. But today, it trades at about $3.50.

Like many other SPAC-backed start-ups, BigBear.ai overpromised and underdelivered. Rising interest rates also crushed its valuations and highlighted its steep losses. But should contrarian investors consider buying this unloved AI stock as a turnaround play?

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Why did BigBear.ai’s stock collapse?

BigBear.ai develops stand-alone AI modules that can be plugged into an organization’s edge networks. Its three core modules (Observe, Orient, and Dominate) are used to gather and crunch large amounts of data to help its clients make decisions faster. It shares its data with other, more diversified analytics companies such as Palantir Technologies (NASDAQ: PLTR).

BigBear.ai also acquired the AI vision technology developer Pangiam in an all-stock deal last March. Pangiam’s co-founder and CEO, Kevin McAleenan, then succeeded Mandy Long as BigBear.ai’s CEO this January. McAleenan worked for nearly two decades in the U.S. government and was an acting secretary of the Department of Homeland Security (DHS) during the first Trump administration, so some bullish investors believe his connections might help the company bring in more government contracts.

But if we compare BigBear.ai’s pre-merger revenue forecasts to its actual performance over the past four years, we’ll see why the bulls retreated and the bears rushed in.

Data source: BigBear.ai.

Management blamed its tepid growth rate on macroeconomic headwinds, tough competition, and the bankruptcy of major customer Virgin Orbit in 2023. But at the same time, many of its larger industry peers — Palantir and C3.ai (NYSE: AI) among them — grew faster and generated higher revenue even as they faced similar headwinds.

Moreover, the company’s revenue growth in 2024 — anemic though it was — came entirely from its takeover of Pangiam. Without that acquisition, its revenue would likely have declined for the year.

What’s next for BigBear.ai?

BigBear.ai’s first few years as a public company were rough, but it has already secured three new government contracts since McAleenan took the helm: an Indefinite Delivery/Indefinite Quantity (IDIQ) contract for the Department of Navy’s SeaPort Next Generation program, a Department of Defense (DoD) contract to use custom AI models to analyze foreign media reports, and an automated force management and analytics contract with the DoD.

For 2025, BigBear.ai is guiding for its revenue to rise by 1% to 14% to a range of $160 to $180 million as it secures more government contracts. The average analyst estimate is for its revenue to rise 7% to $170 million. Given its current enterprise value of $983 million, it seems reasonably valued at 6 times estimated earnings — — but definitely not a bargain.

However, management expects the bottom line to stay in the red in 2025. It guided for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be in the “negative single digit millions,” compared to negative $2 million in 2024.

BigBear.ai has already sold additional shares on several occasions, increasing its total outstanding shares by 86% since it went public, and it could keep diluting its shareholders with more secondary offerings, as well as its high levels of stock-based compensation. Company insiders have also sold more than 21 times as many shares as they bought over the past 12 months.

Why will BigBear.ai remain a polarizing stock?

BigBear.ai’s stock surged in November along with many other AI stocks after President Donald Trump was elected, since many investors expected him to support efforts to ramp up domestic AI infrastructure spending amid the United States’ escalating tech war with China. At its 12-month peak, it was up by more than 400%. However, Trump’s moves to slash government spending blew up that bullish thesis, and the stock plummeted again, giving back the large majority of those gains. In its latest earnings report, BigBear.ai management warned that in the event of a government shutdown or a “substantial shift” in government spending, it might need to revise its guidance.

The bulls believe BigBear.ai’s tightening relationship with the Trump administration will help it secure more government contracts even if it cuts its defense spending. But the bears will counter that as a tiny player in the AI market, BigBear.ai lacks both the scale and the pricing power to keep pace with its larger competitors.

BigBear.ai ended 2024 with $50 million in cash and equivalents on its books, and $134 million in long-term debt. It recently punted a lot of its debt maturities to 2029, but it could struggle to make payments on that debt if it fails to narrow its net losses.

Is it the right time to buy BigBear.ai’s stock?

BigBear.ai will remain a divisive stock for the foreseeable future. It might look like a tempting buy after its recent decline — it’s down by about 64% from its 2025 high — but it isn’t cheap enough to be undervalued. I wouldn’t invest in this company unless it can prove that it’s able to keep growing meaningfully in the shadow of its larger and faster-growing competitors without resorting to desperate acquisitions to boost its near-term sales.

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