BigBear.ai (BBAI 12.11%) stock saw substantial sell-offs last week. The company's share price fell 13.4% in a stretch that saw the the S&P 500 decline 2.4% and the Nasdaq Composite decline 2.2%.

While there wasn't any major business-specific news that pushed the stock lower, the company's valuation retreated in response to the U.S. lifting restrictions on technology exports to China. Despite its recent pullback, BigBear.ai has seen strong valuation gains as investors have sought artificial intelligence (AI) companies with exposure to the defense industry as potentially explosive growth plays. The stock is still up 90.5% over the last three months of trading.

A chart line going down.

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BigBear.ai stock slipped in response to China news

BigBear.ai has seen big valuation gains in conjunction with the defense-AI investing trend, but the stock saw a significant pullback last week on indications that relations between the U.S. and China may be improving. In order to help facilitate trade negotiations with China, the Trump administration paused export restrictions that prevented advanced AI processors and chip manufacturing equipment from being sold into the country. While the lifting of the export licensing requirements likely has minimal direct impact on BigBear.ai's business, some investors interpreted the development as a negative catalyst for defense software plays.

What's next for BigBear.ai?

BigBear.ai will publish its second-quarter results and host an investor conference call after the market closes on Aug. 11. While the company didn't provide guidance for Q2 with its last update, it did issue guidance for full-year revenue to be between $160 million and $180 million -- suggesting annual growth of approximately 7.5%. On the heels of its valuation gains over the last few months, investors may be looking for significant performance beats or new contract or partnership announcements with the company's upcoming quarterly report.