Will BigBear.ai be Able to Offset Army Contract Losses With New Wins?

BigBear.ai Holdings, Inc. BBAI witnessed notable declines in demand volume on certain Army contracts in its recently reported second quarter of 2025 results. These losses had severe blow on the company’s revenues and margins. However, this does not seem to be a woe for BBAI as it is actively engaging into other contracts and partnerships to offset this decline.

BBAI’s core capabilities, including offering AI-driven mission solutions across national security, defense autonomy, border technology, transportation and logistics, are boding well in the current scenario. The company highlighted the deployment of biometric solutions for traveler processing on more than 2,000 devices at more than 500 gates and 25 airports. Besides, the prospects seem promising for its technology solutions supporting defense autonomy, which includes ConductorOS for the Department of Defense's drone forming development efforts, alongside supply-chain management solutions (including Shipyard AI) for enhancing the industrial base for America and its allies.

Amid these new projects, the One Big Beautiful Bill (OB3) is proving to be profitable for BBAI in the long term, given its diversified array of service portfolios. The OB3 allocates $170 billion in supplemental funding to the Department of Homeland Security and $150 billion to the Department of Defense for disruptive defense technology, accompanied by a few more billions for shipbuilding and other critical national security missions. Being engaged in offering AI-driven critical solutions, BigBear.ai is expected to scale from this new legislative investment strategy and witness incremental revenue visibility and profitability.

Internationally, its partnerships with an international holding company in the United Arab Emirates and Narval Holdings in Panama, for deploying AI solutions across security and logistics, are also expected to fuel its growth, despite weaknesses across certain Army contracts.

BBAI Stock’s Price Performance vs. Other Market Players

Shares of this Virginia-based AI-powered decision intelligence solutions provider have gained 48.9% in the past three months, significantly outperforming the Zacks Computers - IT Services industry, the Zacks Computer and Technology sector and the S&P 500 index.

Moreover, firms like Palantir Technologies Inc. PLTR and C3.ai, Inc. AI offer substantial competition to BigBear.ai in the market space of offering AI-based products and services to government clients. Although the market trends are favoring these companies, they are falling behind in realizing the benefits from the robust fundamentals compared with BBAI. In the past three months, shares of Palantir have gained 43.3% while those of C3.ai have tumbled 26%.

BigBear.ai’s Valuation Trend

BigBear.ai stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 9.67, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors. That said, in the long term, the valuation could move toward a premium, given the favorable market fundamentals backing the company’s revenue visibility.

Notably, Palantir and C3.ai are currently trading at a forward 12-month P/S ratio of 88.04 and 4.58, respectively.

EPS Trend of BBAI

BBAI’s bottom-line estimates for 2025 and 2026 have remained unchanged over the past 60 days at a loss per share of 41 cents and 21 cents, respectively. However, the estimated figures for 2025 and 2026 imply year-over-year growth of 62.7% and 49.2%, respectively.

BBAI stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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