Data analytics expert BigBear.ai (BBAI +0.36%) has been soaring in 2024. On the morning of New Year's Eve, the stock was up by 128% in 52 weeks. Inquisitive minds (and growth-hungry investors) want to know if the gains can continue in 2025 and beyond.
So let's take a look at BigBear.ai and its growth prospects. Is this a great artificial intelligence (AI) stock to buy in early 2025?
NYSE: BBAI
Key Data Points
What is BigBear.ai?
BigBear.ai isn't a legendary household name, though its core business has been around since the 1980s.
The current form of this company came together in 2020, when a special purpose acquisition company (SPAC) named Lake Acquisition acquired several AI-based business intelligence companies. This initial splurge included the makers of well-known software such as the ProModel process simulation package, alongside the Open Solutions Group's tech consulting services. Some of these operations were founded in the late 1980s and early 1990s.
The resulting organization provides AI-driven data analytics services for healthcare, government, and heavy construction businesses. The U.S. Army, Navy, and Air Force are three of the company's largest clients. Its systems help people manage and organize equipment and other resources on a large scale, often on tight time schedules.
If my description of BigBear.ai sounds a lot like C3.ai (AI +3.03%) or Palantir Technologies (PLTR +0.52%), you're on the right track. These companies are often found bidding on the same contracts. Computerized support for the defense sector is a large and thriving market, and BigBear.ai is a diversified company with significant interests in other growth sectors.
BigBear.ai and its chief rivals, by the numbers
The direct comparison to C3.ai and Palantir raises some important questions about BigBear.ai. The company addresses some important markets, but how large and successful is the business so far?
Here's how BigBear.ai compares to its core competitors right now:
|
Metric |
BigBear.ai |
Palantir |
C3.ai |
|---|---|---|---|
|
Market cap |
$1.14 billion |
$174.5 billion |
$4.56 billion |
|
One-year stock performance |
114% |
347% |
23% |
|
Revenues (TTM) |
$155.0 million |
$2.65 billion |
$346.5 million |
|
Adjusted net income (loss) |
($57.5 million) |
$476.6 million |
($274.4 million) |
Data source: Collected from Finviz and YCharts on Dec. 31, 2024. TTM = trailing 12 months.
BigBear.ai is the smallest name in this group. The stock has soared recently, but couldn't keep pace with Palantir's massive gains.
It's important to note that BigBear.ai's recent price gains weren't motivated by strong business results or new contract announcements. Indeed, the stock fell nearly 11% in the days after its latest earnings report, which met Wall Street's bottom-line expectations but fell short against their consensus revenue targets.
Instead, the stock has surged mainly due to positive trends in the market for business intelligence and AI tools as a whole. Some of BigBear.ai's biggest jumps in recent months were actually inspired by good news from Palantir.
Is BigBear.ai a buy today?
Would I dare to buy or recommend BigBear.ai's stock today? The shares look affordable at 7.2 times sales (far below C3.ai's shares trading at 13.2x and Palantir at 66.1x sales), but the company is also deeply unprofitable and saddled with a heavy debt load.
It's fair to say that the whole sector is riddled with profit-based risks, as even Palantir's cash machine trades at extremely lofty price-to-earnings ratios. But it's usually up to the underdog in such scenarios to earn its shareholder returns through stellar top-line growth, and BigBear.ai trails behind its larger competitors in this category, too:
BBAI Revenue (TTM) data by YCharts
All things considered, I'd rather stay away from BigBear.ai stock right now. The company is struggling in ways I'd rather watch from the sidelines, at least through the spring of 2025. Palantir and C3.ai may be more sensible options for AI-focused growth investors, and there are many other ways to tap into the AI opportunity in this market.
