Should You Buy BigBear.ai Stock Right Now?

Key Points

• BigBear.ai's revenue has been mostly flat in recent years, but extra government funding for border security could be a catalyst that ignites growth.

• The company ended last quarter in its strongest financial position yet with $248 million of net cash on the balance sheet.

• This will be a volatile stock until BigBear.ai proves it can win larger government contracts.

• 10 stocks we like better than BigBear.ai ›

BigBear.ai (NYSE: BBAI) is a leader in providing artificial intelligence (AI) technology for national security. Investor optimism about increasing government investment in AI, and the potential impact on BigBear, has sent the stock up 361% over the last year.

President Donald Trump's "big, beautiful bill" could be a catalyst, as it provides substantial funding for spending on defense technology. BigBear.ai believes it is well positioned to benefit, but does this make the stock a buy?

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BigBear.ai is aiming for large government deals

Revenue has been flat over the last three years. The company reported an 18% year-over-year decrease in revenue in the second quarter, driven by lower volume from certain Army programs.

While the loss of revenue from these Army programs was a setback, legislative tailwinds are in BigBear's favor. The bill provides billions of dollars in funding for border security, which is one of BigBear's specialties, where it supplies biometric solutions for traveler processing.

BigBear ended last quarter in a solid financial position. It has a net cash position of $248 million on its balance sheet -- the strongest financial position in the company's history. Management intends to invest aggressively in hiring top-tier AI talent and innovation to win a share of the funding going to national security programs.

The stock offers significant upside potential from a market cap of just $2.6 billion. But the company will have to prove it is up to the job and win more contracts, which is no guarantee. I would look at the stock like a call option on whether the company can land a big contract. This is a stock for those who are willing to accept high volatility for the potential of explosive returns if BigBear.ai can secure large government deals.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.