BigBear.ai (BBAI) 2025: The AI Stock That Defied Expectations

When algorithms meet reality—BigBear.ai's rollercoaster year reveals the brutal truth about AI hype cycles.

Market Mayhem and Momentum Shifts

BBAI didn't just trade—it screamed through volatility that would make traditional tech stocks blush. While legacy finance was busy analyzing P/E ratios, crypto-native investors recognized the pattern: disruptive technology doesn't follow predictable curves.

The AI-Crypto Convergence Play

Smart money noticed something most analysts missed—the underlying blockchain infrastructure supporting BigBear's data integrity solutions. While Wall Street was debating quarterly earnings, decentralized networks were quietly validating the company's long-term utility thesis.

2025's Lesson in Digital Asset Valuation

Turns out evaluating AI stocks requires understanding token economics better than discounted cash flows. Another reminder that traditional valuation models remain about as useful as a Bitcoin maximalist at a Fed meeting.

Image source: Getty Images.

But today, BigBear.ai's stock trades at about $5. A $1,000 investment in the stock at its all-time low would be worth about $8,000 today. Let's see why its stock recovered, review its biggest developments over the past year, and predict where it might be headed.

How did BigBear.ai impress the bulls again?

BigBear.ai develops three AI modules -- Observe, Orient, and Dominate -- to ingest data, identify trends, and predict future outcomes, respectively. These modules can be plugged into edge networks, which process the data between origin servers and end users. It also shares that data with bigger AI companies like.

Its recovery commenced under Brothers' successor Mandy Long, who orchestrated its all-stock acquisition of the AI vision company Pangiam last March. That move inorganically boosted its revenue and increased its exposure to the government sector through Pangiam's biometric identity tools. Pangiam CEO Kevin McAleenan was also previously the Acting Secretary of the Department of Homeland Security (DHS) during the first TRUMP administration.

So when McAleenan succeeded Long as BigBear.ai's CEO this January, its stock surged on hopes for new government contracts. It quickly secured new digital ID and biometrics initiatives for the DHS, a modernization project for the U.S. military's Orion Decision Support Platform (DSP), and new supply chain projects. In the second quarter of 2025, its backlog grew 43% year over year to $380 million. That swelling demand, along with the growing usage of Pangiam's biometric tools at airports, drove away the bears.

Why isn't BigBear.ai's stock setting fresh highs?

BigBear.ai's stock bounced back from its all-time lows, but some glaring weaknesses are holding it back. Its backlog is growing, but it will only slowly realize those revenues over the next few years. Many of its government contracts are also fixed-price contracts, which can't be renegotiated if its costs climb at a faster-than-expected rate.

In the second quarter of 2025, it stunned the bulls by reducing its full-year revenue guidance from 1% to 14% growth to a decline of 11% to 21%. Analysts now expect its revenue to drop 16% for the year. It attributed that guidance cut to some disruptions in its government contracts, particularly for its programs supporting the U.S. Army, as the federal government tries to consolidate its data infrastructure.

As its revenue declined, its gross margin plummeted 170 basis points year over year to 23.1% in the first six months of 2025. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin also dropped from negative 7.3% to negative 23%.

Its margins were squeezed by its slowing revenue growth, its dependence on lower-margin customized modules (as opposed to higher-margin recurring subscriptions), and rising research and development expenses. Analysts expect its adjusted EBITDA to stay negative for the foreseeable future.

As BigBear.ai wades through that red ink, it's diluting its investors with secondary offerings, the shares issued for its takeover of Pangiam, and high stock-based compensation expenses. Its number of outstanding shares has already increased 173% since its public debut, and that dilution will worsen as it racks up more losses.

With an enterprise value of $2.04 billion, BigBear.ai still looks expensive at 15 times this year's sales. That high valuation will prevent it from revisiting its all-time highs. That might be why its insiders sold nearly 53 times as many shares as they bought over the past 12 months.

Where will BigBear.ai's stock be in a year?

BigBear.ai's CEO appointment and new government contracts generated some fresh buzz for its stock, but it hasn't proven its business is sustainable yet. So for now, I expect its stock to either trade sideways or decline over the next 12 months as it tries to stabilize its wobbly business.