BigBear.ai Trades at a Discount, Stock Up 14% in a Month: Buy or Sell?

BigBear.ai Holdings, Inc. BBAI currently trades at a forward 12-month price-to-sales (P/S) ratio of 9.76X, below the Zacks Computers – IT Services industry's 12.22X. The valuation discount may attract investors seeking exposure to applied artificial intelligence.

However, the stock's appeal is tempered by continued losses, negative adjusted EBITDA and weakening earnings expectations. With BBAI’s shares gaining recently, investors need to determine whether the improving business momentum is strong enough to support further upside.

P/S (F12M)

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BBAI Stock Gains 14% in a Month

BBAI’s shares have gained 13.9% over the past month, supported by improving operating performance and growing traction for its applied AI offerings. In the same time frame, shares of other industry players, such as Palantir Technologies Inc. PLTR and C3.ai, Inc. AI, have gained 28% and 12.7%, respectively.

Price Performance

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BigBear.ai reported second-quarter 2026 revenues of $36.7 million, up 13% year over year. Gross margin rose 781 basis points to 32.8%, driven by a higher mix of revenues from generative AI platforms and products.

Contract wins have added to the positive momentum. BigBear.ai secured more than 20 new contracts during the second quarter, with individual awards valued at up to $5 million. The company's backlog increased 9% from year-end, while management remains on track to achieve its 2026 revenue guidance of $135-$165 million. BBAI said the wins reflect demand for specialized AI solutions across its target markets.

BigBear.ai is also expanding its product portfolio across defense, national security and trade-related applications. The company highlighted CargoSeer for cargo and customs inspection, Ask Sage for generative AI in secure environments and ConductorOS for coordinating drones and other autonomous systems. A five-year CargoSeer deployment agreement in El Salvador and a new engagement with Naval Air Systems Command demonstrate progress in converting these capabilities into customer opportunities.

BBAI's Earnings Estimate Revision

The Zacks Consensus Estimate for 2026 sales is pegged at $147 million, indicating year-over-year growth of 15.1%. However, loss estimates for 2026 have widened over the past 30 days. The divergence between revenue growth and earnings expectations indicates that BigBear.ai may continue to expand its top line without achieving profitability as quickly as investors might expect.

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The outlook also varies significantly among industry players. Sales for Palantir Technologies and C3.ai for the current year are expected to increase 81.8% and decline 11.5%, respectively, year over year. BBAI's projected growth falls between the two peers, although its expected expansion is substantially below Palantir's pace.

Profitability Remains a Key Weakness

Despite stronger revenue and gross-margin performance, BigBear.ai continues to report losses. The company posted a second-quarter net loss of $25.7 million. While this was a substantial improvement from the prior-year loss, management noted that the year-ago figure was heavily affected by noncash fair-value changes in derivatives and a goodwill impairment charge that did not recur in the latest quarter. Therefore, the improvement in reported net loss does not fully reflect a comparable improvement in underlying operations.

Adjusted EBITDA remains a concern. BigBear.ai reported adjusted EBITDA of negative $11.6 million, compared with negative $8.5 million in the year-ago quarter. Management attributed the deterioration primarily to higher investments in sales and go-to-market capabilities and research and development. While these investments are intended to support growth, they are currently weighing on operating performance.

The improvement in gross margin is encouraging, but it has yet to translate into better adjusted profitability. BigBear.ai will need to generate greater revenues from its growing customer base while improving cost efficiency to demonstrate sustainable operating leverage.

Aggressive Expansion Adds Execution Risk

BigBear.ai is pursuing an aggressive growth strategy that includes potential acquisitions. Management said it is looking for accretive M&A opportunities involving technologies that can be deployed rapidly and scaled. The company has already integrated Ask Sage and CargoSeer, both acquired within the past six months.
Additional acquisitions could broaden the company's technology portfolio and addressable market. However, M&A also introduces integration and execution risks. BigBear.ai will need to successfully integrate acquired businesses and demonstrate that new technologies can generate meaningful revenues and improve its overall financial performance.

The company ended the second quarter with $410 million in cash and investments, providing financial flexibility to pursue its growth plans. However, management intends to use these resources for new capabilities and potential acquisitions while continuing to invest in sales and research and development.

Applied AI Opportunities Provide Growth Potential

BigBear.ai is targeting markets where demand for applied AI could remain strong. Management pointed to increasing investment in defense and security technologies and growing requirements related to national security, trade and travel. The company believes the experience in complex and secure environments gives it an opportunity to address specialized customer needs.

Its product developments provide several potential avenues for expansion. CargoSeer uses AI and computer vision to analyze cargo imagery alongside trade information, while the company's generative AI platform can operate in disconnected and air-gapped environments. ConductorOS enables different autonomous systems to communicate and coordinate, with a particular focus on drone operations.

These opportunities could support growth. However, BigBear.ai must convert its contract pipeline and product investments into sustained revenue growth and improved profitability for the strategy to create greater shareholder value.

Buy or Sell the Stock?

BigBear.ai has made progress across several operating areas. Revenues are growing, gross margins are improving, backlog is expanding and the company continues to win new contracts. Its focus on applied AI for defense, security and trade-related applications also provides avenues for future expansion.

However, the company's financial profile remains challenging. Continued losses, negative adjusted EBITDA and widening loss estimates suggest that stronger revenues have yet to translate into sustainable profitability. The recent stock advance also increases the risk of chasing the shares before the earnings outlook improves.

BBAI currently carries a Zacks Rank #4 (Sell), supporting a cautious stance. While the company's applied AI opportunities and growing customer base are encouraging, the unfavorable earnings trend remains a significant concern. Investors may be better off waiting for a more favorable trend in earnings estimates and clearer evidence of improving profitability before considering the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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