BBAI Stock: BigBear.ai is a Defense AI Pure Play

BigBear.ai [BBAI] is an artificial intelligence (AI) technology company that helps clients analyze data and forecast outcomes. The company derives the majority of its revenue from US government defense contracts.

The Virginia-headquartered firm has sparked investor interest in 2025 amid ongoing geopolitical tensions, higher defense spending proposals and calls to modernize national security in the US.

This stock spotlight will discuss the latest developments, earnings, market performance and outlook for BBAI stock.

BigBear Bags US Federal Contracts 

BigBear.ai secured several federal contracts over the past year, including a $165.15m, five-year deal to transform the US Army’s legacy systems into modern data-centric platforms. The company was also selected as a subcontractor to provide information technology (IT) services to the Federal Aviation Administration (FAA) in a contract worth about $2.4bn over 10 years.

In February 2025, BigBear.ai was awarded a contract by the US Department of Defense to create an AI model called Virtual Anticipation Network (VANE) to study news media in foreign countries. Although the deal value of the contract remained undisclosed, investors cheered the news; BBAI stock saw its best trading day in almost three years following the announcement.

But perhaps the most significant deal for BigBear.ai over the past two years has been the acquisition of security tech firm Pangiam. The deal expanded BigBear.ai’s capabilities with facial recognition and identity verification solutions, allowing the company to sign aviation industry clients, including Heathrow Airport. 

The Pangiam acquisition also led to the appointment of Pangiam founder Kevin McAleenan as BigBear.ai’s chief executive in January 2025.

McAleenan has close ties with the Trump administration and national security agencies, having served as the Acting Secretary of the US Department of Homeland Security and the Commissioner of US Customs and Border Protection.

BBAI Share Price 

BigBear.ai’s share price has increased by about 188% over the past 12 months, as of June 4, 2025.

BBAI stock hit a near-three-year high of $10.36 on February 13, 2025, buoyed by the US Department of Defense wins during the month. 

However, that momentum has since faded, and BigBear.ai’s share price experienced a slump on the back of disappointing earnings last month. At the time of writing, BBAI stock is down 4.3% in year-to-date terms.

Key Fundamentals and Financial Health

In the first quarter of fiscal 2025, BigBear.ai reported a 5% year-on-year increase in revenue to $34.76m, below market expectations of $36.26m.

The company narrowed its quarterly net loss to $61.99m, down from $127.79m a year ago. 

As of 31 March 2025, BigBear.ai’s cash and cash equivalents stood at $107.61m compared to $81.41m a year ago. Long-term debt came in at $100.59m versus $135.4m a year ago.

BigBear.ai maintained its revenue outlook for the full year ended December 31, 2025, at a range of $160–$180m, while holding full-year EBITDA forecast at “negative single digit millions”.

The revenue forecast for fiscal 2025 projected a year-over-year increase of 1.1% at its lower range and an increase of 13.75% at its upper range.

Comparing BigBear.ai, Palantir Technologies and C3.ai 

Source: Yahoo Finance, as of June 4, 2025

When comparing BigBear.ai against AI tech firms operating in the defense sector such as Palantir Technologies [PLTR] and C3.ai [AI], Palantir commanded the highest valuation among the three, likely due to its established status, profitable business and high growth potential.

Between the defense AI minnow stocks — BBAI and AI — analysts expect the latter to post better revenue growth this fiscal year and the next. Neither company was profitable at the time of writing.

BBAI Stock: The Investment Case

Bull Case for BigBear.ai: Rising US National Security Interest

The appointment of Donald Trump as US President bodes well for companies operating in the AI and defense sectors. BigBear.ai is one of the few companies whose operations straddle the two sectors.

President Trump wants the US to maintain its dominance in AI innovation and has issued policies to facilitate AI adoption to improve public services. Additionally, the Trump administration is pushing for the modernization of the US military, with AI technology expected to play a major role in this transformation. 

To support his agenda, President Trump’s discretionary budget proposed a 13% increase in defense spending for fiscal year 2026. The budget also called for the use of AI technology to increase employee productivity and automate routine workloads. These would be positive conditions for BigBear.ai given its AI expertise and strong relationship with government agencies.

Bear Case for BigBear.ai: Sluggish Revenue Growth and Unprofitable Business

Despite the favorable regulations and growth potential of AI, investors should note that BigBear.ai is still unprofitable. Moreover, the company’s revenue growth has been sluggish over the years, with the company reporting a year-on-year rise in fiscal of 2% in 2024 and of just 0.1% in fiscal 2023. 

Investors should also note that the company is heavily reliant on US government spending, which could mean bureaucratic delays and procurement risk. If the firm is unable to turn around its business, BigBear.ai may need to raise more capital to fund operations, which will dilute shareholder value.

Adding to investor concerns, BigBear.ai was recently hit with a securities class action lawsuit. The company was accused of accounting misrepresentation of “certain non-routine, unusual, or complex transactions”.

Conclusion

BigBear.ai is an interesting small-cap, defense AI pure play. The company has carved out a market niche that aligns with rising US national security priorities. In recent years, BigBear.ai has expanded into new sectors such as aviation and security, following the acquisition of Pangiam, but the company’s road to profitability remains uncertain.