BigBear.ai (BBAI -1.47%) is an artificial intelligence (AI) company that provides digital intelligence solutions. In other words, it uses AI and machine learning to help humans make faster, more accurate decisions. Its primary focus areas include defense and national security, supply chain management, cybersecurity, and digital authentication.
NYSE: BBAI
Key Data Points
BigBear.ai went public in December 2021 via a special purpose acquisition company (SPAC) merger with GigCapital4 Inc. It trades on the New York Stock Exchange (NYSE) under the ticker BBAI. The company earns most of its revenue through government contracts but remains unprofitable. Like many AI companies, its stock is highly volatile.
Stock
We'll break down what you need to know if you're interested in investing in BigBear.ai. You'll learn how to add the stock to your portfolio, whether it pays a dividend, who should consider investing, and more.
How to buy BigBear.ai stock
Adding BigBear.ai stock to your portfolio is easy and takes just a few minutes if you have a brokerage account. Follow these six steps to invest in stocks for any publicly traded company.
- Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in BigBear.ai?
BigBear.ai stock may present a high-risk, high-reward opportunity, but it's not right for every investor. Consider investing in BigBear.ai if:
You think the AI revolution is in its nascent stages. If you believe demand for predictive analytics, machine learning, and data-driven decision-making will continue, it may make sense to invest in BigBear.ai and other AI start-ups. However, you should also consider whether you believe BigBear.ai has a competitive advantage over other AI companies.
You believe the government will continue to invest in AI technologies. Most of BigBear.ai's revenue currently comes from government contracts, so if you expect the government to continue to make large investments in AI technology, particularly in the defense sector, you may want to consider BigBear.ai stock.
You think it could be an attractive acquisition candidate. Small AI companies like BigBear.ai could be appealing buys for larger companies, particularly a major defense contractor. Should this occur, BigBear.ai shareholders could benefit from a premium buyout price.
You already own a well-diversified portfolio and are seeking AI exposure. You must be well-diversified before you put money into risky stocks like BigBear.ai.
A small investment in the stock could make sense if your portfolio consists primarily of S&P 500 index funds or other well-diversified mutual funds and exchange-traded funds (ETFs). But if you're heavily invested in AI stocks or other high-growth tech stocks, you might want to pass to increase your exposure to other sectors.
Exchange-Traded Fund (ETF)
2. Global X Defense Tech ETF (SHLD +0.03%)
The Global X Defense Tech ETF has 42 holdings positioned to benefit from the wider adoption of defense technologies. These include companies that focus on cybersecurity, AI, big data, and building advanced military systems and hardware. Its largest holdings include Palantir, along with aerospace and defense companies RTX (RTX +0.43%) and Northrop Grumman (NOC +0.40%).
The fund offers a small amount of exposure to BigBear.ai, with the stock accounting for 0.38% of its holdings. The ETF has an expense ratio of 0.50%.
3. iShares Micro-Cap ETF (IWC +0.49%)
The iShares Micro-Cap ETF offers broad exposure to micro-cap companies by investing in companies with a market capitalization of between $4 million and $4.6 billion. The fund has more than 1,400 holdings, with its largest concentrations in healthcare stocks (25.33%), financial (19.74%), and information technology (17.32%).
BigBear.ai accounts for 0.46% of its holdings. The fund has an ETF expense ratio of 0.60%.
Will BigBear.ai stock split?
BigBear.ai doesn't appear on the list of upcoming stock splits and is unlikely to split its stock anytime soon. After share prices have climbed into the three- or four-figure range, companies often split their stock to make it more palatable to retail investors. As of this writing, the company's shares traded for about $6.60, making it an unlikely contender for a stock split.
The bottom line on BigBear.ai
Investing in BigBear.ai is highly risky, given its widening losses, high level of debt, and heavy reliance on federal government contracts for most of its revenue. The company stands to benefit if federal spending on AI in the defense sector increases, but it's also vulnerable to the big military spending cuts the Trump administration has promised.
Related investing topics
BigBear.ai is working to diversify its operations by expanding into sectors like healthcare, retail supply chain management, and the travel industry. But competition among AI companies is extremely fierce, and BigBear.ai doesn't appear to have a significant economic moat.
Investing in the stock could present an opportunity to reap huge profits if the company can improve its financials, reduce its debt, and diversify its contracts. But investors should also be prepared for big losses.
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