Why BigBear.ai Stock Skyrocketed This Week

BigBear.ai (NYSE: BBAI) stock saw explosive gains in this week's trading. The company's share price ended the period up 47.6%, according to data from S&P Global Market Intelligence.

BigBear.ai gained ground this week following a report from The Economic Times detailing reports suggesting that the company could become the next Palantir in terms of stock returns. The company's share price also climbed following news that President-Elect Trump plans to appoint venture capitalist David Sacks as his administration's artificial intelligence (AI) and cryptocurrency czar.

Palantir-related news helped power big gains for BigBear.ai

On Dec. 2, The Economic Times published an article that looked at recent reports on BigBear.ai stock and raised the possibility that the software specialist could deliver Palantir-like returns. For reference, Palantir stock is up roughly 345% across 2024's trading. Meanwhile, BigBear.ai's share price is up 58% across that stretch.

On the heels of the comparison, Palantir announced new partnerships that created bullish ripple effects for valuations in the AI software industry. Palantir is partnering with Booz Allen Hamilton to use AI and other technologies to accelerate innovations in the defense industry. The company is also partnering with Shield AI for the development of autonomous, unmanned vehicles for defense purposes.

Palantir's new defense deals helped spur more gains for BigBear.ai stock, with some investors betting that the smaller software player could soon land more contracts in the space. The two companies do have an existing partnership that integrates their respective software offerings to improve data collection and analytics insights.

BigBear.ai stock also got a bump from Trump. What's next?

In addition to big gains from Palantir-related stories, BigBear.ai stock also got a lift from Trump's announcement that he plans to appoint Sacks as AI and cryptocurrency czar. The move was broadly interpreted as a signal that the new Trump administration will take a proactive approach to promoting the advancement of the AI industry.

But while the past week saw bullish catalysts for BigBear.ai stock on multiple fronts, the big gains have also pushed the company's risk profile higher. Notably, the software specialist saw an explosive valuation surge over the past week despite little in the way of news that appears to be materially meaningful for the business. With the business still posting losses and now valued at roughly five times this year's expected sales, the stock looks risky on the heels of its big rally.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Booz Allen Hamilton. The Motley Fool has a disclosure policy.