Can BigBear.ai Ride the AI Defense Wave to Profitability?

BigBear.ai Holdings, Inc. BBAI is positioning itself at the intersection of artificial intelligence and national security, an increasingly lucrative niche. In first-quarter 2025, the company reported $34.8 million in revenues, up 5% year over year, largely driven by expanding defense and homeland security contracts. Notably, BigBear secured a major win with the Department of Defense for its Orion Decision Support Platform, highlighting its capabilities in mission-critical AI deployment.

Despite this traction, profitability remains elusive. The company posted a net loss of $62 million in the quarter, with adjusted EBITDA swinging deeper into negative territory at $7 million. Still, the balance sheet is improving. BigBear ended the quarter with $108 million in cash and cut its convertible debt from $200 million to $142 million. A growing $385 million backlog, up 30% from last year, suggests strong forward momentum.

CEO Kevin McAleenan’s dual-market strategy, blending national defense and commercial adjacencies, offers a credible growth outline. Investments in scalable products like Pangiam Threat Detection and veriScan are beginning to yield international interest, while alliances and R&D expansion reflect a long-term commitment to innovation.

However, federal procurement delays and lumpy revenue cycles create uncertainty. The company has a history of operating losses and high stock-based compensation. For now, BigBear.ai remains a speculative play riding a powerful macro trend. If execution improves and contract monetization accelerates, the company may just convert defense-led demand into sustainable profitability.

Other Industry Players Poised to Benefit From Defense AI Drive

As BigBear.ai seeks to ride the defense AI wave, it faces stiff competition from larger, more established players like Palantir Technologies PLTR and Booz Allen Hamilton BAH, both entrenched in the national security AI space.

Palantir continues to lead the government AI software market with platforms like Gotham, boasting strong federal relationships and consistent profitability. Its deep integration into U.S. defense and intelligence workflows sets a high competitive bar for BigBear.ai, particularly as Palantir expands into AI operating systems with AIP.

Meanwhile, Booz Allen offers robust consulting-led AI deployment across defense and homeland security missions. Its scale, existing contracts, and systems integration capabilities give it a clear edge in delivering turnkey, AI-powered defense solutions.

BBAI’s Price Performance, Valuation and Estimates

Shares of BigBear.ai have lost 13.9% year to date (YTD) compared with the Zacks Computers - IT Services industry’s 6.7% decline. 
 

BBAI is currently trading at a 6.33X forward 12-month price-to-sales (P/S) ratio, a markdown compared to its industry, as shown below.
 

The Zacks Consensus Estimate for 2025 loss per share is pegged at 41 cents, which has widened from 21 cents in the past 60 days. Yet, the estimated figure indicates a narrower loss from a loss of $1.10 per share a year ago.
 

BigBear.ai stock currently carries a Zacks Rank #4 (Sell). 

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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