BigBear.ai (BBAI 1.93%) may be at the top of some investors' lists entering 2026. It checks a lot of boxes: artificial intelligence (AI), a small company, and a huge opportunity. Add those factors together, and you have a stock that could result in some explosive growth.
As a result, it's a popular AI pick for 2026. Some may even wonder if this stock could be a ticket to becoming a millionaire over the long term.
Is BigBear.ai a surefire bet to make a massive return on investment? Or are there other AI stocks that present a better opportunity?
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BigBear.ai is taking a page out of Palantir's playbook
Palantir Technologies has been one of the most successful stock picks over the past three years. At its start, Palantir focused on government clientele and artificial intelligence software, and that's exactly what BigBear.ai is doing.
BigBear.ai develops custom AI solutions for government, although some of its work does spill over to the civilian side (such as airport passenger processing software). But that's the big issue: they are custom solutions. Custom means it is developing a new platform for each client, which doesn't bode well for margins. This shows up in BigBear.ai's gross margin, as it's well below the normal subscription software company's gross margins of 70% to 90%.
BBAI Gross Profit Margin data by YCharts
BigBear.ai's margins consistently range between 25% and 30%, which is the typical profit margin for subscription software companies. Take Palantir, for example -- during its last quarter, it put up a net income margin of 40%. Profit margins like that are impossible with BigBear.ai's current business setup, so this presents itself as a major red flag for me.
However, BigBear.ai's latest acquisition could be a step in the right direction.
Ask Sage is a genius acquisition by BigBear.ai's management team
During its Q3 earnings announcement, BigBear.ai's management team reported that it had acquired Ask Sage for $250 million. Ask Sage had an annual recurring revenue of $25 million in 2025, so it paid around 10 times sales for it. That's actually a pretty cheap price tag to pay, especially for a company that is expected to see annual recurring revenue 6 times greater than a year ago.
Ask Sage is a generative AI platform aimed at defense, national security, and other regulated industries. There could be a huge market for this product, and it's a platform rather than a custom AI software business. This is a great acquisition, and it's possible that this product could become BigBear.ai's primary offering in the future, especially if it can maintain its impressive growth rate.
Still, BigBear.ai has a long way to go before it's a viable investment opportunity.
In Q3, BigBear.ai posted its worst operating margin over the past three years -- a sign of widening losses.
BBAI Operating Margin (Quarterly) data by YCharts
BigBear.ai has a big hole to dig itself out of, and until I see signs of improvement on the profitability side and continued growth of Ask Sage, I'm not interested in BigBear.ai's stock.
BigBear.ai could be a successful investment over the long run, but I doubt it can make you a millionaire from a meager investment. The biggest sign is BigBear.ai's revenue growth. In Q3, BigBear.ai's revenue fell 20% year over year. AI products should be practically selling themselves right now, but BigBear.ai's aren't. If BigBear.ai can't drive meaningful revenue growth when times are good, what makes me think that they could do it when times aren't as good?
There are far better alternative AI investments that investors should consider before picking BigBear.ai. Although it may have some short-term success, I doubt it will be a solid pick over the long haul.
