Key Factors
BigBear.ai struggled to generate constant income progress in recent times.
Its high line fell by 18% final quarter as a consequence of decrease volumes from authorities applications.
The inventory’s modest valuation may enchantment to progress traders, but it surely’s in no way a protected funding.
- 10 shares we like higher than BigBear.ai ›
Shares of corporations concerned with synthetic intelligence (AI) proceed to be scorching this yr as demand stays sturdy for AI-powered services and products. Firms are investing closely into next-gen applied sciences in an effort to cut back their personnel and overhead bills, and enhance profitability.
One inventory that generated spectacular returns in 2025 is BigBear.ai Holdings (NYSE: BBAI). Yr so far, the info analytics firm’s shares are up by round 55%. And with a market cap of $3 billion, it is one of many smaller gamers within the rising AI world. However whether or not it may well proceed to soar larger will seemingly rely on whether or not its monetary outcomes look sturdy. The corporate plans to launch its third-quarter numbers on Nov. 10 — however do you have to put money into BigBear.ai earlier than then?
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Will BigBear.ai’s progress rebound in Q3?
The large query about BigBear.ai is how sturdy its Q3 progress charge can be. Whereas the tech firm hopes to be a giant participant in AI and profit from the business’s progress, there was loads of choppiness in its progress just lately. For instance, within the second quarter, its income declined by 18%.
BBAI Income (Quarterly YoY Development) knowledge by YCharts.
The corporate skilled a substantial decline in gross sales in Q2, which it stated was “as a consequence of decrease quantity on sure Military applications.” That highlights simply how dependent the enterprise is on authorities spending. Whereas there may be a bounce again on this upcoming quarter, the corporate’s This autumn steerage might not be all that sturdy provided that the federal government is presently within the midst of one in every of its longest shutdowns in historical past, and that alone may sink the inventory.
May one other massive post-earnings drop be across the nook?
When BigBear.ai reported its Q2 ends in August, the inventory nosedived from $7.09 the day the outcomes got here out to lower than $6 the next day. Whereas it has rebounded since that sell-off, it definitely demonstrated that this is usually a pretty susceptible inventory to be holding on earnings day. Many occasions up to now few years, it declined notably in worth after reporting its numbers.
BBAI knowledge by YCharts.
The inventory is a largely speculative purchase, and its efficiency could rely closely on the outlook for the enterprise, and whether or not its progress prospects have improved. However given its unsteady high line and the truth that the corporate is nowhere close to profitability (it has incurred $443.9 million in complete internet losses over the previous 4 quarters), it might not be on the right track for an additional post-earnings dip.
BigBear.ai’s inventory could possibly be due for an additional massive disappointment
Though retail traders have proven loads of pleasure about BigBear.ai’s inventory over the previous yr, its fundamentals do not counsel the inventory is an effective purchase. Its income rose by simply 2% final yr and by 9% over a three-year interval. This is not a inventory that screams progress. As a substitute, it is a dangerous and unprofitable enterprise to put money into.
There are various corporations concerned with knowledge analytics today, and AI is making it simpler for much more companies to supply comparable providers. With a lot competitors and big losses, BigBear.ai faces an uphill battle to win over traders. Whereas the inventory could do effectively within the brief time period as a consequence of hypothesis, there is no compelling motive to put money into it at this time. Its upcoming quarterly numbers are prone to affirm that.
Whereas its low market cap may make it an interesting possibility for progress traders pondering long run, there are a lot safer and higher progress shares to put money into than BigBear.ai proper now.
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David Jagielski has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
