BigBear.ai Holdings (BBAI +5.15%) has witnessed wild swings in its stock price in the past year. While investors have been buying shares of this generative artificial intelligence (AI) software specialist in the hope that it could become the next Palantir Technologies, BigBear.ai's results haven't been all that great.
But what's worth noting is that BigBear.ai stock has clocked remarkable gains of 155% in the past year despite bouts of volatility. Also, investors may be tempted to buy BigBear.ai considering that its price-to-sales ratio of 12 is much lower than Palantir's sales multiple of 100, and it is operating in the fast-growing AI software market.
That's why we are going to take a closer look at BigBear.ai's prospects for the next three years and check if this AI stock has the potential to make the most of the fast-growing market it operates in.
Image source: Getty Images.
BigBear.ai's financial performance hasn't been solid
BigBear.ai's growth hasn't been all that great despite it operating in the AI software platforms market that's reportedly clocking an annual growth rate of over 40%, according to IDC.
NYSE: BBAI
Key Data Points
BigBear.ai's revenue in the first nine months of 2025 dropped by 12% to just over $100 million. The company significantly reduced its guidance in August this year. It was earlier forecasting its top line to land in a range of $160 million to $180 million. But uncertainty about the timing and volume of its government contracts led it to reduce its revenue guidance range to between $125 million and $140 million.
For comparison, BigBear.ai ended 2024 with $158 million in revenue. So, BigBear.ai isn't showing any signs of becoming the next Palantir so far. Of course, both companies ply their trade in the AI software platforms space and cater to government customers, but that's where the similarities end.
Palantir made its name as a provider of analytics and software solutions to government agencies, but it didn't ignore commercial customers. The company launched its AI software platform for both commercial and government customers in 2023, and it is reaping the benefits of the same right now. This is evident from the acceleration in Palantir's growth in recent quarters.
The company clocked an impressive 63% year-over-year jump in revenue last quarter to $1.18 billion. Its favorable unit economics led to a 110% jump in adjusted earnings to $0.21 per share. Palantir's revenue backlog increased by an impressive 91% from the year-ago period to $8.6 billion, and the growth in its commercial customer base is playing a central role in driving this growth.
BigBear.ai is nowhere close to those numbers. Its margins fell last quarter, and it posted an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $9.4 million as compared to a profit in the prior-year period. Its backlog was also much smaller at $376 million. However, the stock has been gaining impressive momentum of late thanks to its decision to acquire Ask Sage, a company that distributes generative AI models and AI agents to defense and security agencies, along with companies serving highly regulated sectors.
BigBear.ai is going to pay $250 million for this acquisition. The good part is that this move indeed has the potential to lift BigBear.ai's sagging growth rate. That's because Ask Sage's annual recurring revenue (ARR) has reached $25 million this year, a 6x jump over last year. However, investors should note that the move doesn't do much to diversify BigBear.ai's revenue stream.
The company already relies on federal contracts for a large chunk of its revenue, and the Ask Sage acquisition doesn't help it diversify. BigBear.ai is already dealing with the pitfalls of serving government customers, as it is dependent on the timing of the contracts and federal budgets. So, it would have made more sense for BigBear.ai to make a push into the commercial side of the AI software market by taking a leaf out of Palantir's playbook considering that its commercial customer count was up by 49% year over year last quarter.
Can BigBear.ai step on the gas in the long run?
It appears that BigBear.ai's revenue is on track to drop in 2025. The good news is that it is expected to report growth in 2026, but the bad news is that analysts are anticipating almost no growth in 2027.
BBAI Revenue Estimates for Current Fiscal Year data by YCharts.
Even if BigBear.ai were to step on the gas and deliver a 20% increase in revenue in 2028, its top line would land at just over $194 million. That would translate into a compound annual growth rate (CAGR) of 13% (based on its estimated 2025 revenue), which may not be enough to justify its valuation. After all, BigBear.ai's sales multiple is a premium to the tech-laden Nasdaq Composite index's sales multiple of 5.4.
If the company achieves $194 million in sales after three years and trades in line with the index's sales multiple, its market cap would land at just over $1 billion. BigBear.ai currently has a market cap of $2.74 billion, which means that its prospects aren't solid enough to help this AI stock sustain its rally over the next three years.
