BigBear.ai (BBAI -3.26%) has had fairly the 2025. The inventory is up an excellent 70% yr to this point, but it surely has additionally been down as a lot as 46%. This inventory has been an absolute rollercoaster trip for traders, however those that have stayed affected person have executed effectively.
This is the large query: Will the rollercoaster trip proceed its upward development, or is a big drop forward? Let’s check out what’s in retailer for the remainder of 2025 to see whether or not it is a good synthetic intelligence (AI) inventory to scoop up now.

Picture supply: Getty Photos.
BigBear.ai’s income is tied to a couple shoppers
BigBear.ai is among the few pure-play AI firms accessible available on the market. Usually, the biggest AI gamers produce other choices that make AI an ancillary play, however BigBear.ai will not be one among them. BigBear.ai provides a number of providers, however most are particularly focused towards U.S. authorities shoppers. Nonetheless, it has additionally introduced a number of key product wins with the United Arab Emirates.
Nonetheless, BigBear.ai does not have a ton of shoppers. In 2024, 4 clients accounted for 52% of whole income. That is excessive focus and could possibly be an issue for BigBear.ai if one among them decides to discontinue their contract. This occurred in 2024, as a buyer who accounted for 19% of income in 2022 and 9% in 2023 is not a consumer.
If this occurs with different clients, it might spell catastrophe for the inventory. Nonetheless, as BigBear.ai features extra shoppers and turns into extra deeply built-in with its current ones, this danger decreases. This is not a show-stopper for the inventory, but it surely’s a danger that each one traders ought to pay attention to.
One other issue with BigBear.ai is that it isn’t rising at a speedy tempo. Within the first quarter, income elevated by 5% yr over yr. Nonetheless, that does not inform the entire image as a result of the backlog elevated by 30%. This means that BigBear.ai noticed a big improve in contracts however hasn’t acknowledged the income. It will present some progress sooner or later, however traders will wish to see each numbers transferring almost in tandem sooner or later.
Nonetheless, with BigBear.ai’s comparatively small income base (it generated $160 million over the previous 12 months), signing a brand new, important contract might ship shares hovering. There is not any means of figuring out what’s on the horizon with BigBear.ai, so it is all a guessing sport relating to whether or not an enormous contract is coming its means.
Ought to there be an announcement, do not be stunned if the inventory experiences a big motion following the information. That is what traders are holding on to, as a result of the remainder of the enterprise seems considerably suspect.
BigBear.ai’s gross margins are one factor to look at
In comparison with most software program firms, BigBear.ai’s gross margins are poor.
BBAI Gross Revenue Margin (Quarterly) knowledge by YCharts.
Typical software program firms report gross margins between 70% and 80%, with the very best attaining margins of over 90%. Nonetheless, BigBear.ai’s are quite a bit decrease as a result of it is extra of a service-oriented AI firm than a Software program-as-a-Service (SaaS) enterprise mannequin.
This caps the utmost revenue BigBear.ai will sooner or later have the ability to make (it is at the moment deeply unprofitable). Consequently, when traders see that the inventory is buying and selling for beneath 12 occasions gross sales, they should not assume that it is essentially low cost.
BBAI PS Ratio knowledge by YCharts. PS Ratio = price-to-sales ratio.
The truth is that BigBear.ai’s inventory is at the moment very costly, given its progress and gross margins. Whereas there could possibly be an announcement that drives the inventory greater and justifies immediately’s price ticket, I can’t be collaborating to find out. BigBear.ai’s inventory is at the moment being pushed by hype reasonably than precise outcomes, and whereas the inventory might proceed to rise, it is going to be unpredictable. Moreover, it might crash if it stories poor quarterly earnings.
There are far too many nice AI shares accessible at enticing costs to be messing round with BigBear.ai’s inventory, and I might reasonably be invested in confirmed winners than shares pushed by hype.
Keithen Drury 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.