BigBear.ai (BBAI +0.95%) stock has gone parabolic. At the start of the year, it was trading at around just $4, and as of this writing it's over $9 -- it more than doubled in 2025.
The decision intelligence and analytics company recently secured a key contract with the government, which appears to have jump-started the stock. Could this be just the beginning of a much larger rally for BigBear.ai?
NYSE: BBAI
Key Data Points
BigBear.ai wins a contract with the Department of Defense
On Feb. 5, BigBear.ai announced that it was awarded a contract with the Department of Defense, which will use the company's Virtual Anticipation Network (VANE). According to BigBear.ai, VANE helps to "anticipate adversarial actions in complex environments and respond preemptively." It does a what-if analysis to help optimize decisions and uses artificial intelligence (AI) and machine learning.
The announcement did include how much the contract is worth, but investors may see it as an important vote of confidence from the government regarding BigBear.ai's platform, potentially opening up more growth opportunities for the business in the long run. As next-gen AI technologies become more prevalent and the government increases spending on defense, BigBear.ai has the potential to benefit greatly from such trends.
Days before the announcement, on Jan. 30, the company announced it won a Navy contract, which could also lead to opportunities with other federal agencies. Government deals aren't new for BigBear.ai, but investors appear to be particularly bullish on the recent one, including the Department of Defense.
Are investors expecting this to be the next big AI stock?
Shares of BigBear.ai jumped by 45% the day the deal with the Department of Defense was announced, and trading volumes quadrupled. Trading volumes remained elevated since, and the stock has continued to rally higher, as the excitement doesn't appear to be dying down just yet.
Given the excitement on seemingly light news, BigBear.ai is looking like it might be yet another speculative AI play. The company's financials haven't been terribly impressive, as through the first nine months of 2024, BigBear.ai's revenue totaled $114.4 million, flat from the same period a year earlier. Its operating loss over the past three quarters totaled $125.3 million, and that includes a hefty $85 million goodwill impairment charge. But even without the impairment charge, the business appears to be nowhere near breaking even.
BigBear.ai's stock is riding high right now despite fairly lackluster results. While there is potential for the business to generate significant growth in the future, it could be a long time before that happens, and there isn't a clear path to profitability anytime soon.
Investors should be careful with BigBear.ai
When a stock rises this quickly on seemingly minor news, the danger is that it can also come down just as rapidly. Tech stocks involved with AI became hot buys with retail investors in recent years, and while that can lead to significant gains, it can also leave investors vulnerable to corrections later on.
BigBear.ai is a company that still has a lot to prove. Its financials aren't impressive, and while it has been securing government contracts, its growth hasn't been consistent. It looks to be too early to invest in the stock just yet, and investors are likely better off taking a wait-and-see approach. It's possible it can continue riding this recent momentum higher, but that would involve taking on a lot of risk and buying the stock based on price movement rather than its underlying fundamentals.
