BigBear.ai Holds Steady Amid Financial Challenges and Strategic Partnerships

BigBear.ai Holdings, Inc. (BBAI) has experienced a 13.2% decline over the past month, which trails the Zacks Computers – IT Services industry’s 5.3% drop and the Zacks Computer & Technology sector’s decrease of 4.2%. Notably, this small-cap company achieved a remarkable 62.3% increase over the past year, significantly outpacing the industry’s 4.1% decline. BBAI’s niche lies in artificial intelligence, providing decision intelligence solutions. However, the stock market’s turbulent beginning to 2025 has raised concerns following a record-setting 2024. Investors have reacted to BigBear.ai’s larger-than-expected net loss of $108 million in the fourth quarter of 2024 and a dismal outlook for 2025.

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Given the recent sharp decline in BBAI stock amidst a broader market sell-off, it is essential to explore whether investing in this AI company is a sound decision at present.

Key Factors Impacting BigBear.ai’s Stock Performance

The fourth-quarter results were heavily affected by non-cash charges, particularly a $93.3 million adjustment from changes in derivative liabilities related to newly issued convertible notes due in 2029. Consequently, the company reported a net loss of $108 million despite revenue of $43.8 million—a year-over-year increase of 8% compared to the same quarter in 2023.

Operating expenses, particularly selling, general, and administrative (SG&A) costs, showed substantial growth. SG&A increased to $22.2 million from $18.2 million the previous year. The recurring SG&A expenses surged significantly, partly due to the acquisition of Pangiam and its accompanying operational costs. This rise in expenses negatively impacted operational efficiency and led to an adjusted EBITDA reduction to $2 million in the fourth quarter from $3.7 million a year earlier.

Looking ahead, the company forecasts negative single-digit millions in adjusted EBITDA for 2025, reflecting ongoing pressures from integration efforts and operational scaling.

BigBear.ai is contending with substantial challenges in its key government markets. Operating sectors such as border security, defense, intelligence, and critical infrastructure depend heavily on federal budgets and procurement cycles. Current fiscal caution, coupled with a continuing resolution in Congress, has caused delays and uncertainty in government contract funding—creating ripple effects for BigBear.ai and other federal contractors.

Prospects for a BigBear.ai Stock Recovery

Despite these challenges, BigBear.ai appears to be setting the stage for long-term growth through targeted execution and disciplined financial strategies. Its backlog rose dramatically, hitting $418 million at the end of 2024, compared to $168 million the previous year—offering a solid pipeline of future revenue. The integration of Pangiam is anticipated to strengthen BigBear.ai’s capabilities in identity analytics and security, thereby enhancing its alignment with urgent national interests.

Furthermore, the company is maturing its technology portfolio and securing larger, long-term contracts. A significant development occurred in March when the U.S. Department of Defense awarded BBAI a sole-source contract valued at $13.2 million, set to last for 3.5 years, intended to support the chairman of the Joint Chiefs of Staff’s Directorate for Force Management. These advancements indicate that BigBear.ai is transitioning toward a more steady growth path while aligning its solutions with critical applications in AI-powered decision intelligence.

Industry collaboration has elevated BigBear.ai’s standing, with partnerships involving prominent tech firms like Amazon (AMZN), Palantir (PLTR), and Autodesk (ADSK). These companies have integrated BigBear.ai’s technology into their platforms. Amazon Web Services (AWS) has adopted BBAI’s ProModel solution to enhance AI-driven logistics and warehousing capabilities through predictive modeling.

Additionally, Palantir’s partnership aims to strengthen its analytics services, while Autodesk has utilized BigBear.ai’s solutions to enhance its design and engineering offerings, showcasing usage in industrial automation.

BigBear.ai Stock Valuation Overview

Currently, BBAI is trading at a forward 12-month price/sales ratio of 4.74X. This figure surpasses its median of 2.1X, though it remains below the Zacks Computer and Technology sector’s 5.45X. As it stands, BBAI possesses a Value Score of F.

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Estimates Indicate a Bearish Trend for BBAI Stock

The Zacks Consensus estimate for 2025 loss per share stands at $0.21, having widened by a couple of cents over the last 60 days.

Find the latest EPS estimates and surprises on Zacks earnings Calendar.

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Conclusion

While BigBear.ai has made significant progress in expanding its backlog and forming impactful partnerships with industry leaders such as Amazon, Palantir, and Autodesk, the near-term prospects raise substantial concerns for investors.

The company’s increasing losses—driven by notable non-cash expenses and rising operating costs—demonstrate ongoing financial instability. The unfavorable 2025 outlook, expectations of negative adjusted EBITDA, and reliance on unpredictable government contracts further exacerbate the company’s risk profile. As these factors unfold, investors may need to carefully evaluate their positions regarding BBAI stocks.