Why BigBear.ai Stock Skyrocketed 52.6% in the First Half of 2025 and Has Kept Surging

Key Points

• BigBear.ai has gotten a big boost as investors have become increasingly interested in defense artificial intelligence (AI) plays.

• The company's most recent quarterly reports fell short of expectations, but investors are betting on future potential.

• BigBear.ai has kept climbing in the second half of 2025 and could have breakout potential, but the company's valuation profile looks risky.

• 10 stocks we like better than BigBear.ai ›

BigBear.ai (NYSE: BBAI) stock recorded a huge rally across the first half of 2025. The company's share price surged 52.6% across the stretch, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500's (SNPINDEX: ^GSPC) level increased roughly 5.5% across the same time frame.

Despite substantial volatility, BigBear.ai stock saw big gains across this year's first two quarters as investors continue to bet on artificial intelligence (AI) software and service providers. The company's share price has continued to see volatility in the second half of the year, but it's posted significant gains so far in July.

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BigBear.ai stock surged as investors doubled down on AI plays

Artificial intelligence (AI) stocks have seen some big valuation swings in 2025's first half, but the cohort generally enjoyed bullish momentum. BigBear.ai started the year with some significant swings in January, and then went on to see a massive rally in February.

Despite volatility connected to the rollout of DeepSeek's R-1 AI model, Palantir stock also saw strong gains early in the year's trading. The company's positioning in defense-related AI software helped support bullish valuation momentum, and excitement surrounding the business also helped boost BigBear.ai's share price. Some investors drew parallels between the companies and pointed to BigBear.ai as a company with big growth opportunities in the defense software-and-services space, and the dynamic helped power a run-up for the company's stock.

While BigBear.ai has posted two somewhat underwhelming quarterly reports this year, that didn't stop its share price from notching strong gains in this 2025's first half. The company published results for the fourth quarter of its last fiscal year in March, with revenue increasing 8% year over year to $43.8 million and a loss of $0.43 per share in the period. The average Wall Street analyst estimate had called for a loss of roughly $0.05 per share on revenue of $54.6 million.

In May, the company published results for this year's first quarter -- posting sales and earnings for the period that fell short of Wall Street's targets. The business posted revenue of $34.8 million and a $0.25 loss per share. The average analyst estimate called for sales of approximately $36.3 million and a loss of $0.06 per share. Sales were up just 5% year over year in the period, and margins came in softer than anticipated, but the stock enjoyed a strong rally following the report as investors bet on opportunities in the defense AI space.

What's next for BigBear.ai?

Despite some volatility, BigBear.ai stock has continued to gain ground in this year's second half. The company's share price is up roughly 5% in this month's trading. Its valuation has gotten a boost from bullish analyst coverage and market momentum for defense AI plays.

With guidance for sales between $160 million and $180 million, the midpoint of BigBear's target calls for annual revenue growth of roughly 7.5% over the $158.2 million in sales it posted last year. Valued at roughly $2.1 billion, the company is priced at approximately 12.4 times the average analyst estimate's target for this year's sales. While it's possible that sales will accelerate substantially with new contract wins, the company's valuation relative to its rate of sales growth suggests the stock is a risky play right now.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.