Why BigBear.ai Stock Rallied Monday Morning

Shares of BigBear.ai (NYSE: BBAI) got a much-needed boost on Monday, surging as much as 13.7%. As of 11:37 a.m. ET, the stock was still up 13.1%.

The catalyst that sent the artificial intelligence (AI) specialist higher was word the company had scored a big contract.

The U.S. Army's digital transformation

In a press release Monday morning, BearBear announced a new five-year $165.2 million contract to produce a next-generation data system for the U.S. Army. According to the announcement, the system will provide ground troops with the ability to make data-driven decisions "more quickly and with greater confidence."

The system, called Global Force Information Management, represents the next step in the Army's digital transformation efforts, replacing 15 legacy systems with what the company calls "enterprisewide intelligent automation platform, supporting the Secretary of the Army's vision for data-centric force management."

This represents a continuation of BigBear's work for the Army, which has been ongoing for several years.

Does this make BigBear.ai stock a buy?

As longtime investors will note, BigBear.ai is not for the faint of heart. Excitement about the implications and opportunities represented by AI has caused numerous price spikes in recent years, only to give way to the harsh reality that not every AI stock will be a winner.

The company's recent results help illustrate the point. In the second quarter, BigBear generated revenue that grew 3.4% year over year to $38.5 million, resulting in a loss per share of $0.05. While that was an improvement from the loss per share of $0.12 in the prior-year quarter, it wasn't enough to meaningfully lift the stock, and it's still down more than 80% from its peak.

Lastly, BigBear.ai is currently selling for just over 2 times sales. While that might seem like a bargain at first glance, there are other stocks in the AI space that are capitalizing on the opportunity to generate high double-digit growth -- and are profitable to boot.

I would suggest investors look at other, less risky AI stocks.

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Danny Vena 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.