Why BigBear.ai Stock Skyrocketed This Week

Key Points

• BigBear.ai stock surged thanks to news that interest rates are heading lower.

• The Federal Reserve cut the U.S. benchmark interest rate by 25 basis points and indicated more cuts are on the way.

• BigBear.ai stock has seen gains connected to defense AI investing this year, but the company still has a lot to prove.

• 10 stocks we like better than BigBear.ai ›

BigBear.ai (NYSE: BBAI) stock saw huge gains in this week's trading. The company's share price jumped 35.4% higher across the period -- a stretch that saw the S&P 500 rise 1.2% and the Nasdaq Composite rise 2.2%.

BigBear.ai stock's big gains this week stemmed from the Federal Reserve's decision to cut interest rates and guidance on the forward rate outlook. With the surge this week, BigBear.ai stock is now up 54% across 2025's trading.

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BigBear.ai stock roars as Fed cuts rates

The Federal Reserve has cut interest rates by 25 basis points and suggested that it will likely cut rates two additional times this year. The new outlook on rates was enough to power big gains for BigBear.ai and many other speculative growth stocks this week.

What's next for BigBear.ai?

Despite soggy business performance, BigBear.ai stock has managed to post big gains this year, thanks to excitement surrounding artificial intelligence (AI) opportunities in the defense industry. While the company could go on to score some big wins in the defense AI category, there are some reasons to be concerned about its outlook in the space.

With the second-quarter results it posted in August, BigBear.ai reported a loss of $0.71 per share on sales of $32.5 million. The loss was $0.65 per share worse than the average Wall Street analyst estimate for the period, and sales fell roughly $8.1 million short of expectations. BigBear.ai also lowered its full-year sales guidance from between $160 million and $180 million to between $125 million and $140 million, so it's unclear that the business is actually seeing big tailwinds connected to the defense AI trend.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.