Artificial Intelligence (AI) is currently a trending topic in the investment world, yet identifying valuable opportunities in this heated market can prove challenging. Many leading AI stocks have already experienced significant increases in their share prices, often doubling or more. This makes it essential for investors to be cautious and discerning when evaluating potential investments.
When a promising AI stock like BigBear.ai (BBAI +0.49%) unexpectedly drops in price, it warrants a detailed examination to determine if this “big bear” represents a lucrative opportunity that should be seized promptly or if it is a significant risk that should be avoided.
Despite witnessing a 20% decline over the past three months, is it wise to invest in BigBear.ai stock at this moment?
Today’s Change
(0.49%) $0.03
Current Price
$6.20
Essential Financial Metrics
Market Cap
$2.7B
Day’s Range
$6.15 – $6.51
52wk Range
$2.36 – $10.36
Volume
71M
Avg Vol
115M
Gross Margin
27.28%
Is BigBear.ai a Smaller Version of Palantir?
BigBear has garnered numerous comparisons to the renowned AI company Palantir. Similar to Palantir, BigBear is dedicated to providing defense, security, and intelligence-related services primarily to U.S. military and government clients. Both companies share a relatively recent entry into the stock market, with Palantir going public in September 2020, while BigBear completed a SPAC merger to become publicly traded in December 2021.
Additionally, there exists considerable overlap between the AI capabilities of BigBear and those of Palantir. BigBear employs “advanced data analytics, predictive modeling, and real-time insights” to assist agencies in “anticipating risks, effectively allocating resources, and responding rapidly to evolving threats.” This approach closely mirrors Palantir’s platforms, which aim to “deliver the right data to the necessary personnel, enabling them to make data-driven decisions, perform sophisticated analytics, and refine operations through continuous feedback.”
However, unlike Palantir, which has successfully adapted its security-focused AI software into new products for commercial clients, BigBear has struggled to be as agile. The majority of BigBear’s offerings consist of custom-built solutions designed for highly specific use cases, such as its veriScan biometric facial recognition technology for border security and the ConductorOS edge orchestration platform that can be deployed securely even in low-bandwidth environments.
While these systems are essential for their current users, they lack the broad market appeal that Palantir’s AI systems possess, which can integrate various data formats across multiple sources, platforms, and access levels. The prevention of data siloing is a key priority for many large global organizations, while biometric screenings of employees against a database of known drug traffickers do not attract the same level of interest.
Challenges in Growth for BigBear.ai
The challenges in expanding its customer base are having a detrimental impact on BigBear’s financial health. Its trailing-12-month (TTM) revenue has decreased by 10.3% over the past three years, in stark contrast to Palantir’s revenue, which has nearly doubled during the same period. More concerning is the fact that BigBear’s TTM net losses have risen significantly, escalating from a net loss of $69 million at the start of 2024 to a staggering net loss of $396.1 million today. In contrast, Palantir successfully turned its net income positive in mid-2023, surpassing $1 billion in the third quarter of 2025.
In an attempt to reverse its declining fortunes, BigBear has pursued acquisitions, such as the purchase of AI vision company Pangiam in 2024 and the acquisition of Ask Sage, a generative AI platform tailored for secure environments, in 2025. While Ask Sage is anticipated to contribute additional revenue, with over 100,000 users, it remains unclear how this technology will effectively complement BigBear’s existing product offerings.
Moreover, for a relatively small company, the risks associated with pursuing growth through acquisitions in a competitive industry populated by larger players are substantial. BigBear could easily be outbid by competitors with significantly stronger financial resources. Even if BigBear successfully completes valuable acquisitions, the costs involved may not be well-received by shareholders.
Image source: Getty Images.
Implications of Share Dilution on Investment Decisions
Before considering purchasing shares of BigBear at a lower price, investors must be aware that the company is currently seeking shareholder approval to amend its Second Certificate of Incorporation. This amendment would effectively double the number of common stock shares the company is authorized to issue, increasing the limit from 500 million shares to 1 billion shares.
The underlying issue is that to finance its recent acquisitions and reduce some of its debt, BigBear has already nearly tripled its share count, increasing from 156.8 million shares at the start of 2024 to 436.6 million shares today. This significant increase has resulted in shareholders experiencing a 64% reduction in the value of their shares over the past two years. Although CEO Kevin McAleenan has reassured shareholders in his letter that there are no “immediate” plans to issue additional shares, the prospect of existing shareholders facing another 50% reduction in equity is undeniably worrisome.
Ultimately, businesses operating in dynamic and attractive industries rarely see their stock prices drop unless there are underlying problems. In the case of BigBear, multiple issues exist, including declining revenue, share dilution, and a precarious acquisition strategy. Savvy investors should resist the urge to buy the dip until convincing evidence emerges that BigBear.ai has a credible plan to reverse its revenue downturn.
