BigBear.ai Stock Plunges 40%+: Buy the Dip or a Warning Sign?

BigBear.ai Holdings, Inc. BBAI, a competitor to Palantir Technologies Inc. PLTR in the artificial intelligence (AI) defense space, has remained highly volatile throughout 2025. Although the stock attempted a rebound in 2026, it remains firmly in negative territory, with shares down more than 40% over the past six months.

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Does this prolonged decline signal a red flag for investors, or is there more beneath the surface that makes the pullback a potential buying opportunity? Let’s take a closer look –

BigBear.ai Bolsters Defense AI Platform, Signals Growth Amid Volatility 

Late last year, BigBear.ai completed the strategic acquisition of Ask Sage for $250 million in cash, a move that could boost future revenue growth and strengthen its position in the national defense and security market. The addition of Ask Sage enhances BigBear.ai’s platform with a secure generative AI workflow, allowing customers to deploy AI solutions while preserving data privacy, an increasingly important consideration for defense clients. 

BigBear.ai’s CEO, Kevin McAleenan, said, “by bringing Ask Sage into the BigBear.ai family, we are responding directly to what our customers have been asking for – AI that is not only powerful, but trusted, scalable, and ready for real-world missions,” citing the company’s news release. As of now, Ask Sage serves over 100,000 users across 16,000 government teams and numerous commercial customers.  

Following the Ask Sage acquisition, BigBear.ai’s management has expressed optimism, increasing its full-year 2025 revenue forecast to between $125 million and $140 million, according to ir.bigbear.ai. Revenues could receive a further boost if the U.S. government’s proposed “big, beautiful bill” is enacted this year. BigBear.ai’s cash balance of $456.6 million as of Sept. 30, 2025, provides further support to the ongoing growth initiatives. 

Profitability has long been a challenge for BigBear.ai. However, things have begun to improve, with the company posting net income of $2.5 million in the third quarter of 2025 compared with a net loss of $15.1 million in the year-ago quarter. These positive developments should provide some reassurance to stakeholders, even though the stock continues to experience volatility. 

Should You Buy the Dip in BigBear.ai Stock? 

While the Ask Sage acquisition, strong cash position, and potential increase in government spending could support BigBear.ai in the long run, current conditions don’t justify new investors buying the stock.  

This is because the company’s revenue growth has remained weak, with third-quarter 2025 revenues at $33.1 million, down 20% year over year, and second-quarter 2025 revenues at $32.5 million, down 18% year over year. 

To top it off, the company’s operating loss of $21.9 million in the third quarter was more than double that of the previous year. Thus, a drop in sales amid an increase in operating losses could hamper BigBear.ai’s growth momentum. 

BigBear.ai’s dependence on government contracts leaves it vulnerable to policy changes, and rising competition in the AI defense sector could pressure revenue growth. As a result, new investors should approach the BBAI stock cautiously and not be tempted to buy the dip. 

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


 

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

Zacks Investment Research