Down 20%, Should You Buy the Dip on BigBear.ai (BBAI) Stock?

Artificial intelligence (AI) is all the rage right now, but it's hard to find good values in such a hot sector. Many top AI stocks have already seen their share prices double ... or more.

So when an up-and-coming AI stock like BigBear.ai (NYSE: BBAI) suddenly goes on sale, it's worth taking a closer look to see if this "big bear" might be the kind of big bargain worth snapping up quickly ... or a big boondoggle you should avoid.

Despite the fact that it's down 20% over the past three months, should you buy BigBear.ai stock?

A mini Palantir?

BigBear has drawn plenty of comparisons to fellow AI company Palantir. Like Palantir, it's an AI company focused on providing defense, security, and intelligence-related services to U.S. military and government clients. It's also a fairly young stock like Palantir, which went public in September 2020. BigBear went public via a SPAC merger in December 2021.

There's also quite a bit of overlap between BigBear's AI capabilities and Palantir's. BigBear's systems use "advanced data analytics, predictive modeling, and real-time insights" to help agencies "anticipate risks, allocate resources effectively, and respond swiftly to evolving threats." That sounds a lot like Palantir's platforms, which work by "bringing the right data to the people who need it, allowing them to take data-driven decisions, conduct sophisticated analytics, and refine operations through feedback."

However, while Palantir has been able to leverage its security-focused AI software capabilities into new products for commercial clients, BigBear hasn't been as nimble. BigBear's major products are custom-built solutions for very niche use cases, such as its veriScan biometric facial recognition technology for border security, or its ConductorOS edge orchestration platform that can be rapidly but securely deployed even in low-bandwidth environments.

These systems are critical for their current users, but unlike Palantir's AI systems -- which coordinate differently formatted data across multiple sources, platforms, and access levels -- BigBear isn't likely to be able to market them to a broad swath of corporate clients. Preventing data siloing is a priority for many large global organizations. Biometrically screening your employees' faces against a database of known drug smugglers is not.

Stuck in a rut

The lack of opportunities to expand its customer base is affecting BigBear's financials. Its trailing-12-month (TTM) revenue has declined by 10.3% over the last three years, even as Palantir's has nearly doubled. Worse, its TTM net losses have been growing over time, from a net loss of $69 million at the beginning of 2024 to a net loss of $396.1 million today. Meanwhile, Palantir's net income turned positive in mid-2023 and surpassed $1 billion in the third quarter of 2025.

BigBear has tried to use acquisitions to escape its declining fortunes, buying AI vision company Pangiam in 2024 and Ask Sage, a generative AI platform for secure environments, in 2025. While Ask Sage will likely bring in additional revenue -- it has more than 100,000 users -- it's hard to see how the technology complements BigBear's current offerings.

Plus, there are real risks for a very small company trying to grow through acquisition in a hot industry full of big players. It can easily get outbid by a rival with a much stronger balance sheet and financial position. But even if BigBear succeeds in making some valuable acquisitions, shareholders may not like the cost.

Image source: Getty Images.

More share dilution

Before anyone considers buying the dip on BigBear, they need to know that the company is currently asking its shareholders to vote to amend the company's Second Certificate of Incorporation, which would double the number of shares of common stock the company is authorized to issue from 500 million shares to 1 billion shares.

The problem is, to help fund its recent acquisitions and to help retire some of its debt, BigBear has already almost tripled its share count from 156.8 million shares at the beginning of 2024 to 436.6 million shares today, meaning stockholders have already seen the value of their shares take a 64% haircut over the last two years. Even though CEO Kevin McAleenan says in a letter to shareholders that there are no "immediate" plans to issue additional shares, the idea that shareholders could see their existing equity cut by another 50% is concerning, to say the least.

Ultimately, businesses that are active in exciting industries seldom go on sale unless there's something wrong. For BigBear, there are multiple things wrong, including declining revenue, share dilution, and a risky acquisition strategy. Smart investors should avoid the temptation to buy the dip until they see some evidence that BigBear.ai has a solid plan to reverse its revenue losses.

John Bromels has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.