Why BigBear.ai Stock Plummeted This Week

Key Points

• The company released its Q2 report, revealing falling sales and a widening loss.

• Full-year guidance was cut as disruptions continue in the company's federal contracts.

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Shares of BigBear.ai (NYSE: BBAI) are falling this week, down 20.6% as of 3:21 p.m. ET. The drop comes as the S&P 500 and Nasdaq-100 gained 1% and 0.5%, respectively.

The defense-focused artificial intelligence company revealed concerning numbers in its latest quarterly earnings.

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BigBear.ai Q2 earnings disappoint

Wall Street was expecting a small net loss of $0.06 per share on $40.6 million in revenue. BigBear.ai missed these targets by a significant margin, reporting a much larger $0.71 loss per share on just $32.5 million in revenue.

The company's full-year guidance range was also cut heavily, from $160 million-$180 million down to $125 million-$140 million. CEO Kevin McAleenan said that the company's federal contracts had been disrupted, but he also pointed to imminent growth potential from newly authorized Department of Homeland Security (DHS) funding.

Image source: Getty Images

Microsoft, Alphabet, and the rest of big tech have been reporting blowout quarters, but BigBear and other end-user AI companies have not had the same luck, with Palantir bucking the trend, delivering massive growth.

BigBear.ai remains a risky bet

BigBear's losses are growing, sales are soft, and the company's stock carries a hefty premium, one that doesn't leave a lot of room for these trends to continue. BigBear has a lot to prove in the next two quarters, but I'm not convinced we'll see a major reversal. For investors with a high tolerance for risk and high confidence in AI in the near term, BigBear could be a good option. But for most, I would advise avoiding the stock.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.