Should You Buy BigBear.ai Stock Today?

Advances in artificial intelligence (AI) are rapidly transforming the global economy by automating complex workflows and delivering predictive insights that unlock unprecedented levels of productivity.

BigBear.ai (NYSE: BBAI) is a prime example of an emerging leader in the field that deserves a closer look by investors. The technology sector small-cap is developing AI-powered decision intelligence solutions positioned to capitalize on a significant long-term growth opportunity.

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Does a promising outlook for BigBear.ai make its stock a good buy for your portfolio today? Here's what you need to know.

Image source: Getty Images.

What does BigBear.ai do?

While most companies are rushing to add artificial intelligence features to their existing product offerings, BigBear.ai stands out as a pure play on the transformative technology at the core of its data analytics platform. The company has carved out a niche specializing in operationalizing AI and machine learning capabilities for mission-critical intelligence and national defense applications.

Through high-profile clients such as the U.S. Department of Homeland Security and the U.S. Army, BigBear.ai has gained credibility as a defense tech innovator in areas like autonomous systems, cybersecurity, and intelligent supply chain management. Perhaps even more exciting are the ongoing efforts to leverage this expertise in enterprise AI and the private sector as a new growth driver.

Within digital identity services, several airlines and airports worldwide already rely on its Vision AI technology, which combines real-time images with actionable insights. Products include "TrueFace" and "veriScan" verification systems that streamline the passenger screening process. The potential of vision AI extends beyond airports, with applications in supply chain logistics for warehouse inventory management and cargo inspection. Ultimately, BigBear.ai is positioning itself to capture growing AI demand across multiple industries.

Mixed financial trends in 2025

Despite the commercial momentum, BigBear.ai's financial results at the start of 2025 have been muted. The company reported first-quarter revenue of $34.8 million, a 5% year-over-year increase for the period ended March 31, reflecting new Department of Homeland Security contracts and wins in the Digital Identity business. This growth was offset by delays in government program funding for other initiatives.

Increased spending, including on research and development efforts, led to an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $7 million, widening from a $1.6 million loss in the prior-year quarter. Management is projecting optimism in its outlook, citing "encouraging signs" that the strategic focus is resonating with customers.

Favorably, its current order backlog of $385 million is up 30% from $296 million at the end of Q1 2024, suggesting room for stronger growth. BigBear.ai is guiding for full-year revenue between $160 million and $180 million, at the midpoint, representing an 8% increase from 2024. The company also expects its recurring loss to narrow, targeting 2025 adjusted EBITDA in the "negative single-digit millions."

Reasons for caution

There's a lot to like about BigBear.ai as it moves to expand into new industry verticals and enter international markets. Yet, it's important to recognize that the stock remains a speculative investment, given the company's high price-to-sales (P/S) ratio, lack of profitability, and long-term uncertainties. Shares are down 63% from their 52-week high, underscoring underlying market skepticism regarding the company's potential.

First, BigBear.ai will face intense competition from larger tech rivals pursuing many of the same market opportunities. Companies like Palantir Technologies, defense industry consultant Booz Allen Hamilton, and even cybersecurity giants have greater financial resources and pose challenges in both defense and commercial AI applications.

Second, it's unclear whether BigBear.ai's proprietary technology can maintain its innovative edge. Furthermore, while BigBear.ai's modest growth outlook is a step in the right direction, the market will likely want to see evidence of accelerating trends to drive the stock price higher. The possibility that results disappoint and that any timetable for generating consistent profitability gets pushed out would likely keep the stock volatile -- a risk for investors to balance.

The big picture for investors

The next several quarters will be pivotal for BigBear.ai to demonstrate its commercial traction and the success of its growth initiatives. Without a major catalyst on the horizon, I believe the prudent move for investors is to adopt a wait-and-see approach before buying the stock. Ultimately, there may be more compelling AI stocks with a better combination of growth and value available elsewhere.

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Dan Victor 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.