BigBear.ai Holdings, Inc. (BBAI Quick QuoteBBAI - Free Report) has been on a turbulent ride following its second-quarter 2025 earnings release. The stock has plunged 21.3% since the announcement, sharply underperforming both the Zacks Computers - IT Services industry and the broader Zacks Computer & Technology sector. As of Aug. 20, 2025, shares trade near $5.61, recovering slightly from the immediate post-earnings selloff but still reflecting investor unease.

Despite a one-week rebound of about 13.4%, the stock has declined nearly 24% over the past month. Longer-term, however, BigBear.ai remains one of the more volatile names in the defense and AI infrastructure space, boasting a 246.9% surge over the past year. This dramatic swing illustrates the challenge investors face in reconciling BigBear’s bold growth vision with its operational and financial struggles.

BBAI’s Post Q2 Share Performance

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A Snapshot of Q2 Performance of BigBear.ai

BigBear.ai’s second-quarter 2025 results underscored both the challenges of near-term execution and the promise of longer-term structural tailwinds. Revenue fell to $32.5 million, down 18% year over year, as disruptions in Army programs weighed on top-line performance. Gross margin slipped modestly to 25% from 27.8%, while adjusted EBITDA loss widened to $8.5 million from $3.7 million a year earlier. Net loss ballooned to $228.6 million, due to non-cash derivative remeasurement and a $71 million goodwill impairment charge.

Guidance was reset to revenues of $125–$140 million for 2025, reflecting program disruptions and a heavier investment profile. Adjusted EBITDA guidance was withdrawn. Management framed the quarter not as a setback but as a pivot toward offense, pointing to broadened pipelines, international partnerships, and strategic capital deployment as catalysts for long-term shareholder value (read more: BBAI Stock Tumbles on Q2 Loss, Revenues Decline Y/Y, '25 View Down).

Factors Pressuring the BBAI Stock’s Performance

Contract Disruptions Pressure Near-Term Revenue: BigBear.ai’s reliance on large Army programs proved a vulnerability this quarter, as modernization and consolidation efforts within federal contracts disrupted funding flows. The impact was visible in revenues, which declined to $32.5 million in the second quarter from $39.8 million a year earlier. Management acknowledged that the transition in Army data platforms will require time to stabilize and could create variability in quarterly performance until new awards materialize.

Margin Compression and Rising Investment Costs: Operating efficiency came under pressure as gross margin contracted to 25% from 27.8% in the prior year. Coupled with higher R&D spending to advance core AI products, adjusted EBITDA losses widened to $8.5 million. Management withdrew adjusted EBITDA guidance for 2025, citing the dual headwinds of softer revenues and a deliberately heavier investment profile to pursue growth opportunities.

Narrow Pipeline Dependency Requires Diversification: Management conceded that BigBear’s business model has historically leaned too heavily on a handful of large government contracts, creating concentration risk. Although steps have been taken to broaden the pipeline with new prime targets, international opportunities, and diversified customer segments, this transition remains in its early stages, and execution will take time.

Can BigBear.ai Stage a Comeback?

Federal Funding Creates a Generational Tailwind: The passage of the One Big Beautiful Bill (OB3) is a defining catalyst for BigBear.ai. The legislation directs $170 billion toward DHS and $150 billion toward DoD, with substantial earmarks for border technology, biometric exit systems, AI-driven autonomy, and shipbuilding. These align directly with BigBear’s existing platforms, including its veriScan biometric solution, ConductorOS autonomy software, and Shipyard AI. Management emphasized that these tailwinds are not incremental but transformational, offering long-term growth visibility.

Expanding Market Leadership in Biometrics and Autonomy: BigBear.ai is already demonstrating traction in core markets. Its veriScan biometric solution has become a standard across airports and seaports, with deployments continuing to scale. In defense, ConductorOS performed strongly during the Talisman Sabre exercise, showcasing its value in real-time battlefield coordination. The company also secured a DoD contract in drone swarm lethality, further validating its positioning in next-generation defense autonomy.

Global Partnerships Enhance Growth Prospects: Beyond the United States, BigBear is extending its reach through international collaborations. A partnership with International Holding Company in the UAE is focused on accelerating AI adoption across critical sectors, while an alliance with Narval Holdings in Panama introduces new opportunities in cargo and port security. These moves signal BigBear’s intent to diversify its revenue streams and capture growth in global markets that are rapidly investing in AI-enabled infrastructure.

Meanwhile, recently, BigBear.ai has taken a bold step into mainstream visibility through a multi-year partnership with the Washington Commanders. The deal secures naming rights to the team’s training facility in Ashburn, VA—now called the BigBear.ai Performance Center—and elevates the company’s brand presence across the NFL landscape. For an AI defense and infrastructure solutions company like BigBear.ai, widespread brand recognition has historically been limited to government and enterprise circles. This partnership moves BigBear.ai into the spotlight of professional sports, where the NFL’s national reach provides unrivaled visibility.

Balance Sheet Strength Provides Strategic Flexibility: BigBear.ai closed the second quarter with a record $391 million in cash and a net cash position of nearly $250 million. This liquidity milestone, achieved through a well-executed $293 million equity raise, provides the company with the resources to pursue both organic initiatives and strategic M&A. Management highlighted the ability to “go on offense” with this capital, enabling accelerated capture campaigns, expanded marketing, and targeted acquisitions that could broaden BigBear’s footprint and enhance its AI capabilities.

Valuation and Estimate Trends of BigBear.ai Stock

BigBear.ai’s forward 12-month price-to-sales ratio sits at 10.37, well below the industry average of 17.19, suggesting relative undervaluation. However, this ratio masks the company’s widening losses.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

Analysts have grown more pessimistic in recent weeks. The Zacks Consensus Estimate for 2025 loss per share has widened sharply—from a projected loss of 41 cents just a month ago to a much deeper loss of $1.10. This trend suggests that profitability is not on the horizon and that cost pressures may continue to intensify.

Image Source: Zacks Investment Research

Competitors in the National Security AI Landscape

BigBear.ai is hardly alone in chasing the windfall from expanded national security funding. Palantir Technologies (PLTR Quick QuotePLTR - Free Report) remains a powerful competitor, backed by entrenched government contracts and long-standing ties with the DoD and intelligence agencies. Its deep integration and scale across mission-critical analytics platforms give Palantir a clear advantage in capturing a meaningful share of OB3 allocations.

C3.ai (AI Quick QuoteAI - Free Report) is also intensifying its push into government markets. With a wide portfolio spanning defense readiness, predictive maintenance, and logistics, C3.ai has established itself as a direct challenger to BigBear.ai for large-scale federal deals. Both Palantir and C3.ai bring broader scale and stronger reputations, raising the bar for BigBear.ai. To compete, BigBear.ai must lean on differentiation through its specialized offerings such as veriScan and ConductorOS, while strategically deploying its cash reserves to drive focused growth. Its success hinges on whether it can out-innovate Palantir and C3.ai in a crowded and capital-intensive field.

Should Investors Buy the Dip?

While BigBear.ai is aligned with transformative federal spending priorities and has taken steps to diversify its pipeline, execution challenges, ongoing losses, and heavy dependence on a handful of contracts remain pressing concerns. Despite liquidity strength, the widening loss estimates and withdrawal of EBITDA guidance make it difficult to see a clear near-term path to profitability.

With shares down 21% since second-quarter earnings and analysts revising estimates lower, the risks of further downside outweigh the potential for a rebound. The stock currently carries a Zacks Rank #4 (Sell), reflecting negative earnings momentum and underperformance relative to peers. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Despite long-term promise, BigBear.ai’s near-term outlook is fraught with uncertainty, and the prudent move now is to sell the stock and wait for greater clarity on execution and profitability.