With shares up 78% year to date, BigBear.ai (BBAI -3.35%) is catching the attention of investors looking for a small, fast-growing company with millionaire-maker potential. But is the rally based on hype or real substance?

Let’s dig deeper into the pros and cons of this artificial intelligence (AI) software stock to see if it can maintain its epic rally.

What is BigBear.ai?

BigBear.ai was formed by the roll-up of several AI and big data analytics companies held by the private equity firm AEI Industrial Partners. And despite hitting public markets relatively recently through a merger with a special purpose acquisition company (SPAC) in 2021, BigBear.ai is older than you might expect, with some of its components tracing back to 1988.

BigBear.ai’s offerings include biometrics software like facial recognition and contactless identity screening, which is currently deployed at major U.S. airports like Dallas-Fort Worth International and Los Angeles International. It also offers a wide range of big data analytics software solutions designed to help clients glean actionable insights from vast amounts of information. These systems target industries ranging from shipbuilding to cybersecurity and healthcare resource planning.

How is the business performing?

Despite operating in what sounds like a cutting-edge industry, BigBear.ai’s actual results are surprisingly lackluster. First-quarter revenue rose just 5% year over year to $34.8 billion. And while the company’s operating losses technically narrowed from $98.1 million to $21.2 million, this decline was because of a one-time $85 million goodwill impairment charge (related to its recent acquisition of Pangiam) that occurred last year. It doesn’t reflect a sustainable positive trend in the bottom line.

BigBear.ai’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) removes nonrecurring outflows like goodwill impairment and restructuring. And it shows that the company’s losses have actually increased more than fourfold, from $1.6 million to $7 million.

Despite the challenges, management seems optimistic, with CEO Kevin McAleenan claiming to see early and encouraging signs that his company’s strategic focus is resonating. In 2025, Big Bear.ai aims to “strengthen its core” by focusing on opportunities like border security, trade, and shipbuilding. These efforts seem to mirror the priorities of the Trump administration, and it is unclear if the company is just chasing headlines instead of learning into actual competitive advantages.

Image source: Getty Images.

Is BigBear.ai an alternative to Palantir?

On the surface, BigBear.ai looks quite similar to its rival Palantir Technologies. Both offer big data analytics and operate AI-enabled software-as-a-service (SaaS) business models with significant exposure to the national security sector. That said, that’s where most similarities end.

While BigBear.ai’s sales grew by just 5% year over year, Palantir’s surged by 39% as it snagged high-profile contracts with the U.S. Department of Defense and the North Atlantic Treaty Organization (NATO). Granted, with a price-to-sales (P/S) ratio of 122 (BigBear.ai trades for a P/S of 12), Palantir is overvalued despite its high growth rate. But the much lower price tag doesn’t necessarily make BigBear.ai a good alternative when considering its challenges with growth and worsening cash burn.

Is BigBear.ai a millionaire-maker stock?

Markets aren’t always rational. And the hype that caused BigBear.ai’s stock price to rally 78% this year may continue as investors scramble to maximize their exposure to the AI and big data analytics industries.

However, long term, the company’s fundamental weakness may become too glaring to ignore. Investors who want to build sustainable wealth in the stock market should look elsewhere for now.

The hot artificial intelligence (AI) market has birthed a number of high-flying AI stocks. One of these is BigBear.ai (BBAI 0.88%).

The company’s share price soared more than 200% over the past 12 months through June 18. The stock hit a 52-week high of $10.36 in February after President Donald Trump announced Project Stargate, which aims to invest billions of dollars into the AI sector.

Since then, BigBear.ai stock is down more than 50% from its peak. Does this present an opportunity to scoop up the company’s shares for cheap?

Image source: Getty Images.

Why BigBear.ai’s shares plummeted

A confluence of factors led to the decline in BigBear.ai stock this year. One is Wall Street’s concerns about the unpredictable macroeconomic environment, exacerbated by the Trump administration’s tariff approach.

On top of that, the federal government is cutting budgets. This is worrying because BigBear.ai delivers AI solutions centered around national security and infrastructure. Consequently, the bulk of company revenue comes from federal government contracts.

Adding to this mix, in March, BigBear.ai disclosed a material weakness in its internal controls for financial reporting, contributing to the company’s share price decline. As a result, the company restated the last few years’ worth of financial statements. While unrelated, CFO Julie Peffer departed in June.

This wasn’t 2025’s only leadership change. In January, BigBear.ai gained a new CEO, Kevin McAleenan, who had served as Acting Secretary of the U.S. Department of Homeland Security during President Trump’s first term.

BigBear.ai’s financial picture

BigBear.ai’s leadership changes may be a good outcome over the long run. McAleenan’s experience with the previous Trump administration could help BigBear.ai survive the government budget cuts.

In addition, under the previous CEO, the company fell short of its 2024 goal to achieve at least $165 million in sales, coming in at $158.2 million last year. With McAleenan taking over, perhaps BigBear.ai can meet its 2025 full-year revenue target, which ranges between $160 million and $180 million. He will have to succeed to win shareholder confidence in his leadership.

It’s too early to tell if McAleenan can deliver, since he only has the first quarter under his belt. BigBear.ai brought in $34.8 million in Q1 sales, a 5% year-over-year increase.

However, the company’s balance sheet includes a sizable chunk of debt. Of its $198.5 million in total Q1 liabilities, $101.4 million was debt. Q1 total assets were 396.3 million with $107.6 million of that in cash and equivalents.

Moreover, despite year-over-year sales growth, BigBear.ai is not profitable. It exited Q1 with a net loss of $62 million.

Deciding whether to buy BigBear.ai stock

It’s not uncommon for tech companies to operate at a loss, but in these cases, you want to see sales growing rapidly. With just a 5% year-over-year increase in Q1 revenue, BigBear.ai is not achieving strong growth, especially for the hot field of artificial intelligence. This raises questions about the company’s ability to capture customers, let alone eventually achieve profitability.

BigBear.ai’s stock valuation is another factor to consider. The price-to-sales (P/S) ratio is useful for this purpose, since it measures how much investors are willing to pay for every dollar of revenue.

This metric is commonly used with companies that aren’t profitable. Comparing it to artificial intelligence leader Nvidia, as well as C3.ai, a competitor also operating in the government AI sector, helps to understand BigBear.ai’s share price valuation.

Data by YCharts.

The chart shows BigBear.ai’s P/S multiple is the lowest of the three AI companies, and it’s down significantly from where it was at in February. This suggests BigBear.ai shares are attractively valued.

However, Nvidia and C3.ai warrant higher valuations because of their business performance. For example, Nvidia’s revenue rose 69% year over year to $44.1 billion in its fiscal Q1, ended April 27. Meanwhile, C3.ai’s revenue of $108.7 million in its fiscal fourth quarter, ended April 30, represented a 26% year-over-year increase.

BigBear.ai’s mediocre AI revenue growth, debt, and the factors that led to its share price decline this year means investing in the company is risky. As a result, it’s best to hold off buying. Instead, watch its business performance over the next few quarters to see if it can strengthen sales before reconsidering BigBear.ai stock.

Many companies that sell artificial intelligence (AI) services have seen their share price skyrocket over the past couple of years. AI data analytics company BigBear.ai (BBAI 7.88%) has seen significant volatility, but it has also benefited from bullish market sentiment.

The company’s share price has surged 142% over the past 12 months, dwarfing the 11% return of the S&P 500. That said, it has also lost a lot of ground lately with a 24% decline in just the past three months.

The recent dip no doubt has some investors wondering if this is a great time to buy BigBear.ai stock or a warning sign to stay away. The company still has a lot to prove, and here are three reasons investors should leave this AI stock alone right now.

Image source: Getty Images.

1. BigBear’s sales are unimpressive

Small companies that are tapping into such a fast-growing and in-demand market like AI should experience rapid sales growth. And yet BigBear managed to increase its revenue just 5% year over year to $34.8 million in the most recent quarter.

Unfortunately, this appears to be a pattern for the company. Revenue was flat in 2023 and up just 2% in 2024. This year, management says sales could increase 7% (at the midpoint of its guidance).

That’s unimpressive growth for such a young AI company. For comparison’s sake, fellow AI data analytics company Palantir Technologies grew sales 29% last year to $2.9 billion.

Typically, high-growth companies experience lots of top-line expansion early on, and investors hope that momentum eventually leads to profits. But with BigBear.ai, sales growth has been missing for years.

2. The company is far from profitable

BigBear.ai reported an adjusted EBITDA loss of $7.0 million in the first quarter, which was worse than its loss of $1.6 million in the year-ago quarter.

Management said costs were primarily driven by increased research and development expenses as well as recurring selling, general, and administrative (SG&A) costs. In either case, the company can’t afford to have these expenses continue to outpace sales.

For investors hoping profits will soon follow the same pattern as its astronomical share price returns over the past couple of years, it’s likely to be a very long wait.

3. It has had three CEOs over the past four years

This may not be the typical reason investors should steer clear of a company, but it certainly raises some red flags. Leadership is crucial to a company’s success, so it’s worrying to see BigBear.ai under its third CEO since it went public in 2021.

The current CEO, Kevin McAleenan, has only been at the helm since January. He was the acting Secretary of the U.S. Department of Homeland Security during the first Trump administration. This government connection has some investors hoping that BigBear.ai will be able to secure more government contracts. But what they should really be hoping for is McAleenan to stick around long enough to be able to execute a long-term vision for the company.

Sit out this speculative stock

When you add up the company’s leadership changes, weak sales growth, and continued losses, it’s clear to me the stock is not a buy right now.

In a market full of compelling AI stocks, there simply isn’t much that’s appealing about a speculative bet on BigBear.ai.