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When AI-enhanced security company BigBear.ai (BBAI -2.01%) reported earnings at the end of July, investors seemed pleased. Shares rose 18% over the next two weeks.

But unfortunately for BigBear.ai investors, it didn't last. Since then, the company's stock price has tumbled 11.8%. On Tuesday, they plunged below the $3/share milestone. Further declines could be coming.

Is BigBear.ai's stock now in danger of having to perform a reverse split? Here's what investors should know.

Image source: Getty Images.

BigBear.ai's earnings weren't great Enthusiastic investors eagerly bid up BigBear.ai's share price after the company's Q2 earnings report on July 30. That report featured some wins, but left a lot of issues unresolved.

Quarterly revenue of $36.7 million was up 13% year-over-year (YOY), and gross margins also improved from 25% to 32.8% on a YOY basis. That means BigBear.ai is not only making more money, but sending more of the money it makes to the bottom line.

The company also managed to cut its net losses significantly, from $228.6 million in the prior-year quarter to just $25.7 million this year.

BigBear.ai CEO Kevin McAleenan also reaffirmed full-year revenue guidance and touted more than 20 new contracts as a basis for optimism.

The problem for the AI company is that it burned $68.6 million in cash during the quarter, its share count keeps increasing, and while Q2 and trailing twelve-month (TTM) revenue were up from 2025, both are still down from 2024, 2023, and 2022.

In spite of that, a reverse split seems unlikely. Here's why.

Image source: Getty Images.

Why BigBear.ai stock probably won't reverse split Although the stock now trades for less than $3/share, the threshold for maintaining its listing on the New York Stock Exchange (NYSE) is just $1/share, and BigBear.ai shares are still well above that level.

BigBear.ai's share price has briefly dropped below $3/share twice since 2025 without a reverse split: in July, it hit $2.59/share before rebounding, and in April 2025, it dropped to $2.39/share before soaring to $9.78/share later that year. Management is likely hoping for another such turnaround.

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-2.01

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Speaking of management, because reverse splits are often used by troubled companies to maintain their listing on an exchange, company leaders usually try to avoid them. If BigBear.ai announced a reverse split, it might signal that management was worried about shares dropping below the $1 threshold. That could quickly become a self-fulfilling prophecy as nervous investors fled the stock.

Unless BigBear.ai's share price drops below $2/share, investors probably don't have to worry about a reverse split. But this is still a stock that shareholders should keep an eye on. Its price is already volatile, and a single canceled contract or unfavorable news report could have an outsize impact.

Key Takeaways BigBear.ai ended Q2 with a $270M backlog, up 9% from year-end, strengthening revenue visibility.More than 20 new contracts added momentum, with individual values reaching $5M during the quarter.Q2 revenues rose 13% to $36.7M, while Gen AI drove gross margin to 32.8%. BigBear.ai Holdings, Inc. (BBAI - Free Report) is building a stronger base of contracted business as demand for specialized AI solutions expands across national security, trade and travel. Recent contract activity points to growing customer adoption across these markets, while the company’s focus on applied AI gives it opportunities to address complex and security-sensitive use cases. The key factor for the revenue outlook is whether this expanding contract base can translate into a higher level of reported sales.

BigBear.ai ended the second quarter with a $270 million backlog, which increased 9% from year-end. The company also secured more than 20 new contracts during the quarter, with individual values of up to $5 million, following a $53 million total contract value intelligence contract announced in the first quarter. This contract momentum provides greater visibility into future revenues and supports the company’s 2026 top-line guidance of $135 million to $165 million.

The latest results provide an early indication of that conversion. Second-quarter revenues increased 13% year over year to $36.7 million, driven by Gen AI platforms and products. Gross margin also expanded to 32.8%, up 781 basis points, as the revenue mix shifted toward higher-margin Gen AI offerings.

However, converting backlog into revenues will require continued execution across new and existing contracts. Adjusted EBITDA was negative $11.6 million compared with negative $8.5 million a year earlier, reflecting higher investment in sales, go-to-market capabilities and research and development.

Overall, the $270 million backlog and recent contract wins strengthen revenue visibility. The pace at which these awards move into recognized revenues will be a key factor in determining whether BigBear.ai can build on its current top-line growth.

BBAI Faces Competition From Palantir and C3.aiBigBear.ai operates in a competitive AI market, with Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) standing out as relevant peers.

Palantir has a strong presence in defense, national security and commercial AI applications. It focuses on combining AI, data and workflow capabilities to support customers operating in complex and sensitive environments. Palantir’s secure AI and platform capabilities overlap with areas targeted by BigBear.ai, particularly mission-focused applications and government use cases.

C3.ai provides AI solutions across enterprise and government markets, with exposure to defense, intelligence and aerospace. The company is also focused on improving product development and customer deployments across its target markets. C3.ai’s broad enterprise AI offering creates overlap with BigBear.ai’s focus on applied AI, while it remains positioned across a wider range of enterprise and government applications.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have plunged 22.3% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 8.93, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 60 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks Rank

Key Takeaways BigBear.ai's Q2 revenue rose 13% to $36.7 million, driven by stronger generative AI performance.BigBear.ai secured 20 contracts and grew backlog to $270 million, up about $22 million since year-end.CargoSeer, Ask Sage and ConductorOS expand BigBear.ai's AI reach across trade, security and defense. BigBear.ai Holdings, Inc. (BBAI - Free Report) is gaining traction as it expands the deployment of its applied AI solutions across defense, security, trade and travel. In the second quarter of 2026, revenue increased 13% year over year to $36.7 million, driven by stronger performance from its generative AI platforms and products. Gross margin soared to 32.8%, up 781 basis points from the prior-year quarter.

New customer wins and product deployments are providing additional avenues for growth. BigBear.ai secured more than 20 contracts during the quarter, with individual values of up to $5 million, while backlog reached $270 million, up about $22 million from the start of the year. The company also highlighted a five-year CargoSeer deployment agreement in El Salvador following a successful 12-month pilot, potentially providing a template for expansion into other customs markets.

The company is also broadening its AI offerings beyond connected environments. Ask Sage now supports local and air-gapped deployments, allowing customers in highly secure settings to use generative AI without relying on external networks. Meanwhile, ConductorOS demonstrated its ability to coordinate multi-vendor drone systems, addressing the growing need for interoperability across autonomous platforms.

Still, broader growth will depend on converting these deployments and contract wins into sustained revenue. Adjusted EBITDA remained negative at $11.6 million as the company increased spending on sales, go-to-market initiatives and R&D. With $410 million in cash and investments, BigBear.ai has resources to pursue additional capabilities and acquisitions, but execution will remain key to widening its growth base.

Competitors Expand Their AI and Defense CapabilitiesBigBear.ai competes with technology providers that combine AI, data analytics and defense-focused solutions. Palantir Technologies (PLTR - Free Report) is a key competitor, with its platforms helping government and commercial customers integrate data, AI and decision-making capabilities. Its growing focus on deploying AI directly into operational environments overlaps with BigBear.ai’s strategy of providing mission-ready solutions.

C3.ai (AI - Free Report) is another relevant competitor, offering enterprise AI applications designed to address operational and analytics needs across industries. Its AI capabilities span areas such as defense, manufacturing and supply-chain management, creating some overlap with BigBear.ai’s efforts to expand applied AI beyond its traditional customer base.

BigBear.ai’s differentiation centers on specialized applications for national security and trade and travel, including CargoSeer, Ask Sage and ConductorOS. The company’s recent deployments demonstrate an emphasis on solving specific mission-critical problems, while competitors pursue broader AI platforms and enterprise applications.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have plunged 22.2% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 9.67, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 30 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

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

BBAI's 14% monthly gain reflects stronger revenues, margins and contract wins, but losses and widening estimates temper the stock's discounted valuation.

Investors often choose between speculative high-growth software and established hardware giants. Today we compare BigBear.ai (BBAI -2.10%) and Texas Instruments (TXN +2.25%) to see which path offers the best opportunity right now.

BigBear.ai provides specialized intelligence software primarily for government defense, while Texas Instruments manufactures the essential chips found in everything from cars to factory robots. As artificial intelligence transitions from a buzzword to an industrial necessity, comparing a high-stakes software provider to a hardware veteran provides valuable insight for any diversified portfolio looking for exposure to modern infrastructure.

The case for BigBear.aiBigBear.ai sells AI-driven decision support tools to the U.S. Intelligence Community and Department of Defense. The company recently acquired Pangiam to expand its biometrics capabilities for both government and commercial sectors like manufacturing and healthcare. Customer concentration like this adds a layer of risk to the business, as revenue depends heavily on federal appropriations and fixed-price contracts that can be canceled at any time.

In FY 2025, revenue reached nearly $127.7 million, representing a decline of roughly 19.3% compared to the previous year. The company reported a net loss of approximately $293.9 million for the period, which resulted in a negative net margin of 230.2%. This margin figure measures how much loss is generated for every dollar of sales, reflecting the high costs of scaling a technology start-up.

As of its December 2025 balance sheet, the debt-to-equity ratio sat at a conservative 0.19x, indicating that the company carried very little debt relative to shareholder equity just prior to completely clearing its obligations in early 2026. The current ratio, which measures the company's ability to pay short-term obligations with short-term assets, is roughly 1.8x. Free cash flow, or the cash left after paying for capital projects, was negative $46.3 million during the fiscal year.

The case for Texas InstrumentsTexas Instruments produces analog and embedded processors for more than 100,000 global customers. The company focuses on the industrial and automotive markets, which together represent about 66% of its total revenue. By selling directly to customers through its own website, the firm maintains close relationships and captures more value from the semiconductor stocks landscape.

In FY 2025, revenue reached nearly $17.7 billion, which was an increase of approximately 13% over the prior year. Net income for the period was close to $5.0 billion, maintaining a healthy net margin of roughly 28.3%. This indicates it kept nearly 28 cents of every revenue dollar as profit after all expenses were paid.

As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 0.9x, meaning total debt (combining short-term and long-term obligations) is slightly less than the equity held by shareholders. The current ratio is approximately 4.4x, suggesting a strong ability to cover short-term debts. Free cash flow for the year reached nearly $2.6 billion, providing the company with significant capital for dividends and reinvestment.

Risk profile comparisonBigBear.ai faces significant revenue concentration, as a few government agencies provide most of its funding. The company is also navigating financial instability, including multi-year restatements of its financial records and ongoing regulatory filing delays. Furthermore, it must defend against a material class action lawsuit while integrating acquisitions in a crowded market.

Texas Instruments is sensitive to the cyclical nature of the chip industry, where demand can drop suddenly if customers adjust inventories. Geopolitical tensions also pose a threat, as the company generates roughly 20% of its revenue from China. Additionally, it must maintain high manufacturing output in its own factories to offset the high fixed costs of its 300mm wafer fabs.

Valuation comparisonTexas Instruments appears more expensive on a P/S ratio basis, but BigBear.ai lacks a Forward P/E due to its current net loss.

MetricBigBear.aiTexas InstrumentsForward P/EN/A32.2xP/S ratio12.5x14.1xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with Texas Instruments, and it is not a close call. TI just delivered one of its strongest quarters in years, with revenue growing across industrial, data center, and automotive markets simultaneously. Data center revenue doubled year over year, free cash flow surged to levels the company has rarely seen, and management issued above-seasonal guidance for the third quarter. The company also raised prices for the first time in years, which signals confidence in where demand is heading.

BigBear.ai is carving out a defensible niche in AI-powered national security software, and its government contracts are the kind that competitors find difficult to displace. Gross margins are improving, and the backlog is growing. For investors comfortable with early stage risk, the story is worth following.

But BigBear.ai is still unprofitable and generating a fraction of what Texas Instruments produces in free cash flow in a single quarter. TI is a battle-tested compounder with a growing dividend and broad exposure to some of the most durable demand trends in semiconductors. For a long-term investor, that track record is difficult to compete with.

BBAI's Q2 results put execution in focus as revenues rise 13%, margins expand and management targets product scaling and accretive M&A.

Investors seeking exposure to cutting-edge computing technologies often weigh the merits of artificial intelligence against quantum breakthroughs. Choosing between BigBear.ai (BBAI -1.41%) and D-Wave Quantum (QBTS +0.56%) requires balancing government-focused growth with commercial innovation.

BigBear.ai specializes in decision intelligence for defense and logistics, while D-Wave Quantum provides cloud-based quantum computing services. While both companies operate in the high-stakes world of advanced technology, their paths to profitability and market niches differ significantly. This comparison examines their financials, risks, and valuations to help you decide which stock fits your strategy.

The case for BigBear.aiBigBear.ai is a prominent name among tech stocks that provide decision intelligence solutions for supply chains and autonomous systems. The company serves the U.S. Intelligence Community and the Department of Defense alongside commercial manufacturing clients. Customer concentration like this adds a layer of risk to the business, as a few large contracts account for over half of total revenue.

In FY 2025, revenue reached nearly $127.7 million, representing a decline of approximately 19.3% compared to the previous year. The company reported a net loss of roughly $293.9 million for the period, which resulted in a net margin of nearly 230.2%. Net margin measures how much of every dollar in revenue remains as profit after all expenses are paid.

Following its early 2026 debt conversion, the company's debt-to-equity ratio sits at approximately 0.0x, meaning it carries virtually no debt relative to its shareholder equity. This builds on a solid December 2025 foundation where the current ratio was nearly 1.8x, giving the company a strong short-term liquidity buffer. Free cash flow for 2025 was roughly negative $46.3 million, representing the cash remaining after the business pays for its operations and equipment.

The case for D-Wave QuantumD-Wave Quantum positions itself as a leader in the commercial quantum computing space, offering systems and software as a service. The company has secured partnerships with AT&T and Mastercard to explore real-world applications of quantum advantage. It uses a phased engagement model to move customers from initial professional services to production-ready quantum computing as a service.

In FY 2025, revenue reached nearly $24.6 million, which is an increase of approximately 178.5% over the prior fiscal year. Despite this growth, the company reported a net loss of roughly $355.1 million, leading to a net margin of negative 1,444.1%. This figure represents the percentage of revenue remaining after all operating and non-operating expenses are deducted.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 0.2x, suggesting a conservative amount of debt relative to equity. The current ratio is nearly 42.4x, indicating the company has ample short-term assets to cover its immediate liabilities. Free cash flow for the year was roughly negative $75.8 million, indicating the company is still utilizing its cash reserves to fund development and operational growth.

Risk profile comparisonBigBear.ai faces significant risks due to its reliance on a small group of government customers who can terminate contracts for convenience. The company is also dealing with a class action lawsuit and has acknowledged that several years of financial statements require restatements. These accounting challenges are joined by intense competition from Palantir Technologies and other large defense contractors.

D-Wave Quantum operates as an early-stage growth company with a history of significant losses and a constant need for new capital. The company faces stiff competition from well-funded technology giants such as Alphabet, IBM, and Amazon. Furthermore, its operations are subject to complex global regulations and export controls that could delay its technological roadmap in 42 different countries.

Valuation comparisonBigBear.ai is cheaper based on its P/S ratio (market value divided by sales), while both companies currently lack future earnings estimates.

MetricBigBear.aiD-Wave QuantumForward P/EN/AN/AP/S ratio10.4x496.1xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with BigBear.ai, though neither of these companies is a comfortable pick for a cautious investor. Both are unprofitable, and both are asking investors to bet on technologies that are still proving themselves commercially.

That said, BigBear.ai has something D-Wave doesn't right now: a credible near-term revenue path. Its backlog is growing and gross margins are improving sharply. I like that the company is winning classified national security contracts that are difficult for competitors to displace. The government AI market it operates in is growing, and BigBear is already embedded in it.

D-Wave is doing something fascinating in quantum computing, and its bookings surged dramatically in the most recent quarter. But revenue fell sharply at the same time, and the gap between bookings momentum and actual recognized revenue is a risk that investors need to understand before buying in. Quantum computing's commercial moment may still be years away.

For a long-term investor comfortable with early-stage risk, BigBear.ai offers a clearer line of sight to revenue growth than D-Wave does right now.

BigBear.ai Holdings stock is showing downward pressure. What’s next for BBAI stock? What Catalyzed BigBear.ai’s Stock Movement?BigBear.ai posted a second-quarter loss of 5 cents per share, missing expectations for a loss of 4 cents, while revenue of $36.75 million came in ahead of the $36.37 million estimate. The company also said backlog rose 9% to $269.6 million from Dec. 31, 2025 to June 30, 2026, and reported cash and investments of $409.8 million as of June 30, 2026.

BigBear.ai is holding flat despite a positive tilt in growth stocks, with traders balancing the EPS miss against the company’s revenue beat, margin expansion and strong backlog.

Critical Technical Levels for BBAI StockFrom a trend standpoint, the stock is still in a longer-term downtrend: it’s trading 3.6% below the 20-day SMA ($3.01), 21.3% below the 50-day SMA ($3.68), and 38.9% below the 200-day SMA ($4.75). That stack of moving averages, plus the death cross that formed in February (50-day SMA below the 200-day SMA), keeps the bigger-picture technical bias cautious until price can reclaim at least the 20-day/50-day zone.

Momentum is improving, though: MACD is above its signal line and the histogram is positive, which points to fading downside pressure versus the prior downswing. In plain terms, when MACD is above its signal line, it often means buyers are starting to gain traction even if the broader trend hasn’t fully flipped yet.

The recent swing low in July and the 52-week low also set in July ($2.59) make the current area a key "line in the sand" for bulls trying to build a base. On the upside, the June swing high is the nearest reference point for where sellers previously took control, and it’s the kind of level traders often watch for a failed rally versus a true trend change.

Key Resistance: $3.01 — aligns with the 20-day SMA, a near-term trend gauge the stock is still below Key Support: $2.59 — the 52-week low from July, a major downside reference level BBAI Stock Price Activity on FridayBBAI Stock Price Activity: BigBear.ai Holdings shares were trading at $2.83 at the time of publication on Friday, according to Benzinga Pro data.

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BigBear.ai Holdings, Inc. (BBAI) Q2 2026 Earnings Call July 30, 2026 4:30 PM EDT

Company Participants

Sean Ricker - CFO & Principal Accounting Officer
Kevin McAleenan - CEO & Director

Presentation

Operator

Greetings, and welcome to the BigBear.ai Holdings, Inc. Second Quarter 2026 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sean Ricker, Chief Financial Officer. Thank you. You may begin.

Sean Ricker
CFO & Principal Accounting Officer

Good afternoon, and thank you all for joining us today for our second quarter 2026 earnings call. I'm Sean Ricker, CFO of BigBear.ai, and I'm joined today by our CEO, Kevin McAleenan.

Statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Please see today's press release and our SEC filings for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. We also have posted tables on our website today that we plan to address during the call to supplement our comments. These tables also include information regarding non-GAAP measures that may be used in today's call. Please access our website at www.bigbear.ai and click on the Investor Relations link to view and follow the charts.

Now I'll hand it over to Kevin.

Kevin McAleenan
CEO & Director

Good afternoon, and thank you, Sean. I'm pleased to report to our investors that BigBear.ai had a strong quarter. First, revenue for the second quarter of 2026 exceeded revenue for the same period in 2025 by 13%, and our gross margin improved by 781 basis points. We are on track to meet our top

MCLEAN, Va.--(BUSINESS WIRE)--BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a specialized defense & security technology company providing mission-ready AI, today announced financial results for the second quarter of 2026 and issued an investor presentation that has been posted to the Investor Relations section of the Company’s website.

“It has been another strong quarter. Double-digit growth, significant margin expansion and more than 20 new contracts show that the BigBear.ai leadership team is following through on our commitments. We are in a strong financial position with $410 million of cash and investments, we’re on track for our target of 17% revenue growth, and we intend to accelerate. The second half of 2026 is all about execution discipline and positioning ourselves for accretive, catalytic M&A and building momentum for even stronger topline growth in 2027,” said Kevin McAleenan, CEO of BigBear.ai.

“BigBear.ai is in an excellent position to take advantage of the rapid expansion of investment and innovation in defense technology, which shows no signs of slowing down, given the macro environment. We have steadily been maturing the underlying financial discipline of the company and have significant cash in reserve so that when the right opportunity presents itself, we can move fast,” said Sean Ricker, CFO of BigBear.ai.

Financial Highlights

Revenue increased 13% to $36.7 million for the second quarter of 2026, compared to $32.5 million for the second quarter of 2025 due to revenue from Ask Sage’s GenAI Platforms and Products. Gross margin was 32.8% in the second quarter of 2026, compared to 25.0% in the second quarter of 2025, due to increased volume from Ask Sage’s higher margin GenAI Platforms and Products in the second quarter of 2026 as compared to the second quarter of 2025. Selling, general, and administrative expenses increased $10.4 million from $21.5 million in the second quarter of 2025 to $31.8 million in the second quarter of 2026. The increase was primarily driven by increased intangible asset amortization from the Ask Sage acquisition, increased legal and proxy expenses related to our special stockholder meeting and establishing our new Retail Voting Program, and increased sales and marketing expenses resulting from partnerships and expanding our growth team. Net loss in the second quarter of 2026 was $25.7 million, compared to a net loss of $228.6 million for the second quarter of 2025. The decrease in net loss was primarily driven by a decrease in the loss due to non-cash changes in the fair value of derivatives of $135.3 million, a decrease of goodwill impairment of $70.6 million, a decrease in interest expense of $4.1 million, higher gross margin of $3.9 million and increased interest income of $2.1 million. These were partially offset by higher SG&A expenses of $10.4 million, described above, as well as an increase in research and development costs of $3.2 million. Non-GAAP Adjusted EBITDA* of $(11.6) million for the second quarter of 2026 compared to $(8.5) million for the second quarter of 2025 is primarily driven by an increase in SG&A expenses of $10.4 million, partially offset by higher gross margin of $3.9 million. The above information on financial outlook, and other sections of this release contain forward-looking statements, which are based on the Company’s current expectations. Actual results may differ materially from those projected. It is the Company’s practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, changes in law, or new accounting standards until such items have been consummated, enacted, or adopted, as the case may be. For additional factors that may impact the Company’s actual results, refer to the “Forward-Looking Statements” section in this release.

Summary of Results for the Second Quarter Ended

June 30, 2026 and June 30, 2025

(Unaudited)

Three Months Ended June 30,

Six Months Ended
June 30,

$ thousands (expect per share amounts)

2026

2025

2026

2025

Revenues

$

36,749

$

32,472

$

71,184

$

67,229

Cost of revenues

24,698

24,359

47,412

51,728

Gross margin

12,051

8,113

23,772

15,501

Operating expenses:

Selling, general and administrative

31,848

21,487

61,073

44,219

Research and development

7,562

4,393

13,095

8,559

Restructuring charges

384

1,899

384

3,597

Transaction expenses

815

—

2,033

—

Goodwill impairment

—

70,636

—

70,636

Operating loss

(28,558

)

(90,302

)

(52,813

)

(111,510

)

Interest expense

307

4,419

624

9,535

Interest income

(3,817

)

(1,704

)

(7,602

)

(2,260

)

Net increase in fair value of derivatives

471

135,751

20,596

169,087

Loss on extinguishment of debt

—

—

15,826

2,577

Other expense (income)

225

(163

)

236

117

Loss before taxes

(25,744

)

(228,605

)

(82,493

)

(290,566

)

Income tax expense

5

14

19

39

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Basic and diluted net loss per share

$

(0.05

)

$

(0.71

)

$

(0.17

)

$

(0.97

)

Weighted-average shares outstanding:

Basic

479,119,921

320,591,204

476,079,687

299,666,133

Diluted

479,119,921

320,591,204

476,079,687

299,666,133

Consolidated Balance Sheets as of

June 30, 2026 and December 31, 2025

(Unaudited)

$ in thousands (except per share amounts)

June 30,
2026

December 31, 2025

Assets

Current assets:

Cash and cash equivalents

$

36,278

$

87,126

Restricted cash

1,787

5,521

Available for sale investments

282,913

200,461

Accounts receivable, less allowance for credit losses

30,975

22,703

Contract assets

—

218

Prepaid expenses and other current assets

20,926

14,514

Total current assets

372,879

330,543

Non-current assets:

Property and equipment, net

1,891

1,562

Goodwill

238,570

241,100

Intangible assets, net

130,844

139,470

Available for sale investments

90,612

173,949

Right-of-use assets

5,657

7,063

Other non-current assets

859

860

Total assets

$

841,312

$

894,547

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

11,219

$

6,088

Current portion of long-term debt, net

16,643

16,560

Accrued liabilities

15,690

19,649

Contract liabilities

10,180

14,756

Current portion of long-term lease liability

846

1,095

Derivative liabilities

10,455

116,906

Other current liabilities

694

10,466

Total current liabilities

65,727

185,520

Non-current liabilities:

Long-term debt, net

—

90,484

Long-term lease liability

5,261

6,673

Total liabilities

70,988

282,677

Stockholders’ equity

Common stock, par value $0.0001; 1,000,000,000 shares authorized and 479,494,493 shares issued and outstanding at June 30, 2026 and 500,000,000 shares authorized and 436,955,655 shares issued and outstanding at December 31, 2025

49

46

Additional paid-in capital

1,719,285

1,534,792

Treasury stock, at cost; zero shares at June 30, 2026 and 9,952,803 shares at December 31, 2025

—

(57,350

)

Accumulated deficit

(948,067

)

(865,555

)

Accumulated other comprehensive loss

(943

)

(63

)

Total stockholders’ equity

770,324

611,870

Total liabilities and stockholders’ equity

$

841,312

$

894,547

Consolidated Statements of Cash Flows for the Second Quarter Ended

June 30, 2026 and June 30, 2025

(Unaudited)

  Three Months Ended June 30,

Six Months Ended
June 30,

$ in thousands

2026

2025

2026

2025

Cash flows from operating activities:

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

6,806

3,451

13,887

6,921

Amortization of debt discount and issuance costs

41

2,026

82

4,790

Accretion of discount on investments in debt securities

(257

)

—

(638

)

—

Equity-based compensation expense

4,743

4,319

8,166

11,719

Goodwill impairment

—

70,636

—

70,636

Non-cash lease expense

196

254

429

624

Provision for doubtful accounts

42

311

42

351

Loss on extinguishment of debt

—

—

15,826

2,577

Increase in fair value of derivatives

471

135,751

20,596

169,087

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

(8,208

)

5,919

(8,868

)

10,267

Decrease (increase) in contract assets

874

(189

)

218

194

(Increase) decrease in prepaid expenses and other assets

(5,664

)

1,203

(6,003

)

(592

)

Increase (decrease) in accounts payable

6,986

(876

)

5,002

(5,039

)

(Decrease) increase in accrued expenses

(50

)

319

(584

)

4,765

(Decrease) increase in contracts liabilities

(1,092

)

1,449

(4,542

)

1,925

(Decrease) increase in other liabilities

(1,346

)

178

(1,309

)

1,848

Net cash used in operating activities

(22,207

)

(3,868

)

(40,208

)

(10,532

)

Cash flows from investing activities:

Purchases of investments in debt securities

(78,986

)

—

(78,986

)

—

Proceeds from maturities and sales of investments in debt securities

36,261

—

79,486

—

Acquisition of businesses, net of cash acquired

—

—

(10,183

)

—

Purchases of property and equipment

(316

)

(5

)

(635

)

(85

)

Capitalized software development costs

—

(1,159

)

—

(2,699

)

Net cash used in investing activities

(43,041

)

(1,164

)

(10,318

)

(2,784

)

Cash flows from financing activities:

Proceeds from issuance of shares for exercised RDO and PIPE warrants

—

—

—

64,673

Payment of Private Placement and Registered Direct Offering transaction costs

—

—

—

(551

)

Proceeds from at-the-market offering

—

293,431

—

300,000

Payment of transaction costs for at-the-market offering

—

(5,135

)

—

(5,250

)

Repayment of short-term borrowings

—

(85

)

—

(451

)

Payment of debt issuance costs to third parties

—

(337

)

—

(4,679

)

Payment of deferred purchase consideration

(4,523

)

—

(4,523

)

—

Proceeds from exercise of options

13

240

80

1,633

Issuance of common stock upon ESPP purchase

1,590

1,069

1,590

1,069

Payments of tax withholding from the issuance of common stock

(497

)

(361

)

(1,347

)

(1,679

)

Net cash (used in) provided by financing activities

(3,417

)

288,822

(4,200

)

354,765

Effect of foreign currency rate changes on cash, cash equivalents, and restricted cash

24

(555

)

144

(745

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(68,641

)

283,235

(54,582

)

340,704

Cash, cash equivalents, and restricted cash at the beginning of the period

106,706

107,610

92,647

50,141

Cash, cash equivalents, and restricted cash at the end of the period

$

38,065

$

390,845

$

38,065

$

390,845

EBITDA* and Adjusted EBITDA* for the Second Quarter

June 30, 2026 and June 30, 2025

(Unaudited)

  Three Months Ended
June 30,

Six Months Ended
June 30,

$ thousands

2026

2025

2026

2025

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Interest expense

307

4,419

624

9,535

Interest income

(3,817

)

(1,704

)

(7,602

)

(2,260

)

Income tax expense

5

14

19

39

Depreciation and amortization

6,806

3,451

13,887

6,921

EBITDA

(22,448

)

(222,439

)

(75,584

)

(276,370

)

Adjustments:

Equity-based compensation

4,743

4,319

8,166

11,719

Employer payroll taxes related to equity-based compensation(1)

1,188

611

2,024

1,626

Net increase in fair value of derivatives(2)

471

135,751

20,596

169,087

Restructuring charges(3)

384

1,899

384

3,597

Non-recurring strategic initiatives(4)

2,758

717

4,220

1,611

Non-recurring litigation(5)

423

8

669

30

Transaction expenses(6)

815

—

2,033

—

Non-recurring integration costs(7)

94

—

158

—

Goodwill impairment(8)

—

70,636

—

70,636

Loss on extinguishment of debt(9)

—

—

15,826

2,577

Adjusted EBITDA

$

(11,572

)

$

(8,498

)

$

(21,508

)

$

(15,487

)

(1)

Includes employer payroll taxes due upon the vesting of equity awards granted to employees.

(2)

The change in fair value of derivatives during the three months ended June 30, 2026 consists of net losses related to the fair market value adjustments on the 2025 RDO Warrants, IPO private warrants, and 2026 Notes Conversion Option. The change in fair value of derivatives during the six months ended June 30, 2026 primarily relates to a $28.3 million mark-to-market loss for the 2029 Notes Conversion Options immediately prior to conversion. This was offset by net gains related to the fair market value adjustments on the 2025 RDO Warrants, IPO private warrants, and 2026 Notes Conversion Option of $7.7 million.

The change in fair value of derivatives during the three months ended June 30, 2025 relates to the remeasurement of the 2025 warrants, IPO warrants and the 2026 and 2029 Notes Conversion Options derivative liabilities. The change during the six months ended June 30, 2025, relates to the $14.0 million loss recorded upon the exercise of the 2024 RDO and 2024 PIPE Warrants and issuance of the warrants in 2025 in connection with the warrant exercise agreements entered into on February 5, 2025. During the six months ended June 30, 2025,loss related to a mark-to-market adjustment of $59.9M adjustment for the debt to equity conversions during the period was reported. There was an offsetting gain related to the fair market value adjustment on the 2025 warrants and the private warrants of $2.6 million. Additionally, there was an loss of $7.0 million fair market value adjustment of the 2026 and 2029 Notes Conversion Option, during the six months ended June 30, 2025.

(3)

Includes employee separation costs which are associated with strategic reviews of the Company’s capacity and future projections to better align the organization and cost structure and improve the affordability of its products and services.

(4)

Non-recurring professional fees incurred in connection with discrete, non-recurring strategic initiatives, including business transformation and strategy realignment consulting services which management does not consider part of the Company’s ongoing operating expenses.

(5)

Non-recurring litigation consists primarily of legal settlements and related fees for specific proceedings that we have determined arise outside of the ordinary course of business based on the following considerations which we assess regularly: (1) the frequency of similar cases that have been brought to date, or are expected to be brought within two years; (2) the complexity of the case; (3) the nature of the remedy(ies) sought, including the size of any monetary damages sought; (4) offensive versus defensive posture of us; (5) the counterparty involved; and (6) our overall litigation strategy.

(6)

Transaction expenses during the six months ended June 30, 2026 consist primarily of diligence, legal and other related expenses incurred associated with the Ask Sage and CargoSeer acquisitions.

(7)

Non-recurring internal integration costs related to the Ask Sage acquisition.

(8)

During the six months ended June 30, 2025, the company recognized a non-cash goodwill impairment charge primarily driven by a change in forecast during the second quarter of 2025.

(9)

Loss on extinguishment of debt is related to voluntary conversions of the 2029 Notes to common stock and the related extinguishment of unamortized debt discount and debt costs.

Forward-Looking Statements

This release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “project,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding our industry, future events, and other statements that are not historical facts. These statements are based on current expectations and beliefs concerning future developments and their potential effects on us and should not be relied upon as representing BigBear.ai’s assessment as of any date subsequent to the date of this release. There can be no assurance that future developments affecting us will be those that we have anticipated. Many actual events and circumstances are beyond our control. These forward-looking statements are subject to a number of risks and uncertainties, including those relating to: changes in domestic and foreign business, market, financial, political, and legal conditions; the uncertainty of projected financial information; delays caused by factors outside of our control, including changes in fiscal or contracting policies or decreases in available government funding, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics; changes in government programs or applicable requirements; budgetary constraints, including any potential constraints as a result of recent or future federal government layoffs, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies, including government shutdowns or the ability of the U.S. federal government to unilaterally cancel a contract with or without cause, and more specifically, the potential impact of the U.S. DOGE Service Temporary Organization on government spending and terminating contracts for convenience; the failure of contracts comprising backlog to result in revenue due to changes in funding, terminations for convenience, or option periods going unexercised; the impact of tariffs or other restrictive trade measures; implementation of spending limits or changes in budgetary constraints; influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers; changes in our ability to successfully compete for and receive task orders and generate revenue under Indefinite Delivery/Indefinite Quantity contracts; our ability to realize the benefits of the strategic partnerships; risks that the new businesses will not be integrated successfully or that the combined companies will not realize estimated cost savings; failure to realize anticipated benefits of the combined operations; potential delays or changes in the government appropriations or procurement processes; risks regarding the market and our customers accepting and adopting our products, including future new product offerings; the high degree of uncertainty of the level of demand for, and market utilization of, our solutions and products; our ability to successfully execute and realize the benefits of joint ventures, channel sales relationships, partnerships, strategic alliances, subcontracting opportunities, customer contracts and other commercial agreements to which we are a party; and those factors discussed in the Company’s reports and other documents filed with the SEC, including under the heading “Risk Factors.” If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from those projected by these forward-looking statements. There may be additional risks that we presently do not know or that we currently believe are immaterial which could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this release. We anticipate that subsequent events and developments will cause our assessments to change. However, we specifically disclaim any obligation to do so. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Non-GAAP Financial Measures

The financial information and data contained in this press release is unaudited. Some of the financial information and data contained in this press release, such as EBITDA and Adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP in our press release, we also report certain non-GAAP financial measures. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company’s financial statements. Non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis. Because not all companies use identical calculations, our presentation of non-GAAP measures may not be comparable to other similarly titled measures of other companies.

The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of BigBear.ai’s liquidity. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, as defined in our non-GAAP definitions below, which are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, even where similarly titled, limiting their usefulness for comparison purposes and therefore should not be used to compare BigBear.ai’s performance to that of other companies. We endeavor to compensate for the limitation of the non-GAAP financial measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors and analysts with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key measures used by management to operate and analyze our business over different periods of time.

EBITDA is defined as net loss before interest expense, interest income, income tax expense (benefit) and depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted for equity-based compensation, employer payroll taxes related to equity-based compensation, net increase in fair value of derivatives, restructuring charges, non-recurring strategic initiatives, non-recurring integration costs, non-recurring litigation, transaction expenses, goodwill impairment, and loss on extinguishment of debt.

Similar excluded expenses may be incurred in future periods when calculating these measures. BigBear.ai believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. BigBear.ai believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends and in comparing BigBear.ai’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expense and income items are excluded or included in determining these non-GAAP financial measures.

Management uses EBITDA and Adjusted EBITDA as non-GAAP performance measures which are reconciled to the most directly comparable GAAP measure, in the tables included in this release. The Company does not reconcile forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure (or otherwise describe such forward-looking GAAP measure) because it is not able to forecast the most directly comparable measure calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amounts are not predictable, making it impracticable for the Company to forecast. As a result, no guidance for the Company’s net (loss) income or reconciliation of the Company’s Adjusted EBITDA guidance is provided. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future net income (loss).

About BigBear.ai

BigBear.ai is a specialized defense technology company, developing and deploying mission-ready AI solutions and services. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. Headquartered in McLean, Virginia, BigBear.ai is a public company traded on the NYSE under the symbol BBAI. For more information, visit https://bigbear.ai/ and follow BigBear.ai on LinkedIn: @BigBear.ai and X: @BigBearai.

BigBear.ai Holdings, Inc. BBAI is scheduled to report second-quarter 2026 results on July 30, 2026, after the closing bell. The upcoming quarter is expected to reflect continued execution of defense and security contracts, growing adoption of generative AI solutions and sustained momentum across its National Security and Trade & Travel markets.

Key Takeaways BigBear.ai enhanced Ask Sage and CargoSeer to broaden enterprise AI capabilities and customer reach.BBAI increased its backlog 14% as new contracts expanded across airports, defense and logistics.Technology products are becoming a larger revenue mix, supporting improved gross margin. BigBear.ai Holdings, Inc. (BBAI - Free Report) is accelerating product innovation to strengthen its competitive position in artificial intelligence and secure more enterprise customers. During its first-quarter 2026 earnings call, management highlighted that faster product development, combined with a customer-centric operating model, is helping the company expand its reach beyond traditional government contracts.

The company has realigned its sales, technology, delivery and customer success teams around the needs of operators in national security, and trade and travel. This restructuring is expected to speed up product development and deployment while enabling BigBear.ai to tailor solutions more effectively to customer requirements. The strategy also supports quicker decision-making and closer collaboration with clients.

Innovation across its recently acquired platforms is already showing results. CargoSeer introduced AI-powered invoice fraud detection for air cargo. At the same time, Ask Sage launched Version 2 featuring a simplified user interface, faster workflows and advanced tools such as Agent Builder and CodeCanvas. The company also expanded Ask Sage into commercial markets, allowing enterprises and international partners to access its secure generative AI platform.

These enhancements are supporting customer momentum. BigBear.ai secured new contracts across airports, shipbuilding, NASA and defense agencies, contributing to a 14% sequential increase in backlog to $281.9 million. Management also noted that technology products are becoming a larger share of revenues, helping to improve gross margin despite continued investments in research, development and sales.

While near-term profitability remains under pressure due to higher operating investments, BigBear.ai's faster innovation cycle and expanding AI portfolio position it well to attract more enterprise clients. Sustained execution and broader commercial adoption will be key to translating these product advancements into long-term revenue growth.

Can BigBear.ai Keep Pace With AI Industry Leaders?BigBear.ai faces intense competition from larger AI software providers like Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) , both of which are expanding their enterprise AI offerings. Palantir continues to strengthen its commercial business through the Artificial Intelligence Platform, helping enterprises deploy generative AI applications at scale. Its strong customer adoption, growing commercial revenues and deep integration capabilities make Palantir a formidable rival in winning large enterprise contracts.

C3.ai is also focused on accelerating enterprise AI adoption through industry-specific applications across manufacturing, energy, financial services and defense. The company continues to enhance its generative AI capabilities while expanding partnerships with major cloud providers to broaden customer reach.

Unlike these broader AI platforms, BigBear.ai differentiates itself through mission-ready AI solutions tailored for national security, border protection, logistics and critical infrastructure. Its recent enhancements to Ask Sage and CargoSeer, along with a faster product development cycle, could help the company capture niche enterprise opportunities. However, sustained innovation and successful commercialization will be essential for BigBear.ai to compete effectively against larger and better-capitalized AI rivals.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have declined 50.3% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 8.71, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has remained stable in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

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

In the latest trading session, BigBear.ai Holdings, Inc. (BBAI - Free Report) closed at $2.92, marking a -7.01% move from the previous day. The stock fell short of the S&P 500, which registered a loss of 0.51% for the day. Meanwhile, the Dow lost 0.2%, and the Nasdaq, a tech-heavy index, lost 1.47%.

Prior to today's trading, shares of the company had lost 19.07% lagged the Computer and Technology sector's loss of 2.99% and the S&P 500's gain of 0.53%.

The investment community will be closely monitoring the performance of BigBear.ai Holdings, Inc. in its forthcoming earnings report. The company is predicted to post an EPS of -$0.04, indicating a 33.33% growth compared to the equivalent quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $36.37 million, up 12.01% from the year-ago period.

For the full year, the Zacks Consensus Estimates are projecting earnings of -$0.25 per share and revenue of $146.59 million, which would represent changes of +69.51% and +14.82%, respectively, from the prior year.

It's also important for investors to be aware of any recent modifications to analyst estimates for BigBear.ai Holdings, Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. BigBear.ai Holdings, Inc. is holding a Zacks Rank of #3 (Hold) right now.

The Computers - IT Services industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 86, placing it within the top 35% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

BBAI has pulled back sharply as investors weigh AI growth opportunities against slower revenue growth and ongoing profitability challenges.

Key Takeaways BigBear.ai eliminated $124.6 million of 2029 convertible notes, leaving $16.5 million of debt.BBAI ended Q1 with $431.5 million in cash and investments and backed 2026 revenue guidance.BBAI's backlog rose 14% sequentially to $281.9 million, helped by a $53 million intelligence contract. BigBear.ai (BBAI - Free Report) has taken a meaningful step toward strengthening its financial profile by aggressively reducing debt, a move that could improve investor confidence even though the company remains unprofitable.

The biggest milestone came in January 2026, when BigBear.ai eliminated the remaining $124.6 million of its 2029 convertible notes, primarily through debt-to-equity conversions. As a result, only about $16.5 million of debt remained at the end of the first quarter, with management expecting that balance to be settled before the end of 2026. The transaction also reduced first-quarter interest expense by $4.8 million year over year, freeing up resources for growth initiatives.

The healthier balance sheet gives BigBear.ai greater financial flexibility as it pursues opportunities in national security and trade and travel. Management ended the first quarter with $431.5 million in cash and investments, while affirming its 2026 revenue guidance of $135-$165 million. The company also reported a 14% sequential increase in backlog to $281.9 million, supported by a $53 million classified intelligence contract and expanding demand for its Ask Sage generative AI platform.

Operationally, the company is shifting toward higher-margin software and AI platforms. Ask Sage is helping improve revenue mix, contributing to a sharp expansion in gross margin to 34% from 21.3% a year earlier. Management is also integrating recent acquisitions, reorganizing sales teams around growth markets and targeting additional government AI contracts.

While the deleveraging effort marks a positive turning point, it is not a complete investment thesis. BigBear.ai continues to post net losses and negative adjusted EBITDA, while operating cash flow remained negative in the first quarter. For the stock to sustain a re-rating, the company must convert its stronger balance sheet, expanding backlog and AI-driven product portfolio into consistent revenue growth and profitability.

BBAI’s Price Performance, Valuation & EstimatesShares of BBAI have plunged 39.4% so far this year, lagging the Zacks Computers - IT Services industry, as shown below. At the same time frame, other industry players, including C3.ai, Inc. (AI - Free Report) and Palantir Technologies (PLTR - Free Report) , have lost 33.6% and 28.7%, respectively.

BBAI Stock’s YTD Price Performance

Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 10.05, as evidenced by the chart below. Other industry peers, such as C3.ai and Palantir, have P/S ratios of 6.17 and 32.33, respectively.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has remained unchanged in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago loss of 82 cents per share.

EPS Trend of BBAI Stock

Image Source: Zacks Investment Research

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

As the market moves into late 2026, many investors are choosing between BigBear.ai (BBAI 1.66%) and SoundHound AI (SOUN 0.60%) to capture the next wave of growth in the artificial intelligence sector.

While both companies specialize in machine learning, they serve very different markets. BigBear.ai focuses on decision intelligence for government and industrial supply chains, while SoundHound AI provides conversational voice technology. Comparing them helps clarify whether you prefer a defense-heavy stability play or a high-growth consumer technology bet.

The case for BigBear.aiBigBear.ai provides decision intelligence solutions for supply chains, autonomous systems, and cybersecurity. Its core customers include the U.S. Intelligence Community and the Department of Defense, where it utilizes multi-year engagements for critical government work. Customer concentration is a factor, as 51% of revenue came from customers contributing over 10% each, which adds a layer of risk to the business.

In its 2025 fiscal year (FY), revenue reached $127.7 million, representing a decline of 19.3% compared to the prior year. The company reported a net loss of $293.9 million for the period. This resulted in a negative net margin of 230.2%, a metric that measures how much of each dollar of revenue remains as profit after all operating and non-operating expenses.

As of its December 2025 balance sheet, the debt-to-equity ratio was zero. The current ratio stands at 1.8x, which measures a company's ability to cover its short-term debt and liabilities with assets like cash and accounts receivable. Free cash flow was negative at $42.5 million, representing the actual cash a company generates after accounting for the money spent on capital expenditures like equipment or software.

The case for SoundHound AISoundHound AI provides a voice and agentic AI platform that enables conversational experiences across digital and physical channels. It serves major automotive manufacturers and restaurant chains, offering tools that allow users to interact with technology using natural speech. No single customer accounted for more than 10% of revenue in 2025, suggesting a more diversified base than many peers in the software sector.

For FY 2025, revenue grew by 99.4% to reach $168.9 million. Despite this rapid top-line expansion, the company reported a net loss of $14 million. The net margin was negative 8.3%, which indicates that the company is getting closer to breaking even compared to the prior fiscal year when losses were much deeper relative to sales.

Based on the December 2025 balance sheet, the debt-to-equity ratio is zero. Its current ratio is 4.6x, a figure that shows the company has significantly more short-term assets than short-term liabilities. Free cash flow was negative at $103.1 million, reflecting the heavy capital investment required to support rapid organic growth and strategic acquisitions.

Risk profile comparisonBigBear.ai faces material accounting errors that required multi-year restatements, leading to ongoing class action lawsuits. The business relies heavily on government contracts, which are vulnerable to federal budget deficits and potential termination. Furthermore, the company has recorded non-cash goodwill impairment charges exceeding $155 million, while competition from major defense contractors creates pressure on contract terms.

SoundHound AI is navigating legal probes and investor litigation related to its acquisition-related governance and internal control weaknesses. The company relies on aggressive mergers and acquisitions to scale, including the purchase of LivePerson, which creates integration and accounting risks. While revenue is growing, constant capital raises through equity offerings dilute existing shareholders, and competition from massive technology giants such as Amazon poses a threat to long-term pricing power.

Valuation comparisonBigBear.ai trades at a lower revenue multiple, but SoundHound AI offers significantly faster growth and a higher current ratio for investors prioritizing liquidity and momentum.

MetricBigBear.aiSoundHound AISector BenchmarkForward P/En/an/a357.9xP/S ratio9.3x16.9xn/aSector benchmark uses the SPDR XLK sector ETF. Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Both BigBear.ai and SoundHound AI provide exposure to the artificial intelligence boom, but not all AI-focused companies are positioned to prosper. That’s why my choice to invest in between the two is SoundHound.

BigBear.ai is highly dependent on government contracts to power its revenue growth. When the Trump Administration cut costs in 2025, BigBear.ai was among the enterprises affected, causing a steep revenue decline. In 2026, it posted sales of $34.4 million, a 1% year-over-year drop despite the contribution of its Ask Sage acquisition. This suggests the company continues to struggle with growing its business amidst the hot AI market.

SoundHound’s Q1 sales soared 52% year over year to $44.2 million. The company has achieved impressive growth through a series of acquisitions, although management stated excluding the impact of acquisitions, Q1 revenue rose 88%. This highlights how its core business is seeing strong customer demand.

SoundHound forecasts 2026 sales to hit between $225 million and $260 million, up from 2025’s $168.9 million. The company’s ability to maintain excellent revenue growth is a key factor behind why I think it’s the superior artificial intelligence stock to buy over BigBear.ai.

In the latest close session, BigBear.ai Holdings, Inc. (BBAI - Free Report) was down 3.5% at $3.31. The stock trailed the S&P 500, which registered a daily loss of 0.28%. On the other hand, the Dow registered a loss of 1.09%, and the technology-centric Nasdaq increased by 0.2%.

The company's stock has dropped by 14.04% in the past month, falling short of the Computer and Technology sector's loss of 1.22% and the S&P 500's gain of 1.64%.

Market participants will be closely following the financial results of BigBear.ai Holdings, Inc. in its upcoming release. In that report, analysts expect BigBear.ai Holdings, Inc. to post earnings of -$0.04 per share. This would mark year-over-year growth of 33.33%. Meanwhile, our latest consensus estimate is calling for revenue of $36.37 million, up 12.01% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates are projecting earnings of -$0.25 per share and revenue of $146.59 million, which would represent changes of +69.51% and +14.82%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for BigBear.ai Holdings, Inc. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. BigBear.ai Holdings, Inc. currently has a Zacks Rank of #3 (Hold).

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 103, putting it in the top 42% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Key Takeaways BigBear.ai added industrial AI contracts and expanded its digital twin and simulation platform.BBAI strengthened its AI portfolio through the Ask Sage and CargoSeer acquisitions.Growing backlog, higher margins and reaffirmed 2026 guidance reflect continued execution. BigBear.ai Holdings, Inc. (BBAI - Free Report) is steadily evolving from a pure-play AI software provider into a broader industrial technology company. While its core strength remains mission-ready artificial intelligence for defense and security, recent initiatives suggest the company is building a more diversified business by applying AI to manufacturing, logistics and critical infrastructure.

During the first quarter of 2026, BigBear.ai secured new contracts for its Shipyard AI platform with Canada's Chantier Davie and U.S.-based Bollinger Shipyards. The company also highlighted growing demand for its ProModel simulation platform, which enables digital twins for manufacturing, warehousing, healthcare and defense operations. These industrial applications move the company beyond traditional AI analytics into operational optimization, where customers use predictive modeling to improve productivity and resource planning.

The expansion is further supported by acquisitions. Ask Sage strengthens BigBear.ai's generative AI capabilities, while CargoSeer extends its reach into cargo inspection and supply-chain intelligence. CargoSeer recently introduced AI tools to detect invoice fraud and match shipping documents with cargo contents, broadening the company's addressable market beyond government agencies. Ask Sage has also launched a commercial version, opening its secure AI platform to enterprises in defense, security and critical infrastructure.

Financially, the strategy is beginning to gain traction. First-quarter backlog climbed 14% to $281.9 million, supported by more than $60 million of national security awards, while gross margin expanded to 34% as higher-margin AI platforms contributed a larger share of revenues. Management also reaffirmed its 2026 revenue guidance of $135-$165 million, indicating confidence in continued execution.

Although BigBear.ai still relies heavily on government spending, the growing portfolio of industrial AI, digital twins and supply-chain solutions positions it to diversify revenue sources and expand well beyond traditional AI software over the long term.

Industrial AI Rivals to Watch: Palantir and C3.aiBigBear.ai's push into industrial AI and mission-critical solutions places it in competition with Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) , both of which are expanding AI adoption across government and commercial markets. Palantir has built a strong presence in defense, manufacturing and supply-chain optimization through its AI Platform, enabling customers to deploy AI-driven decision-making across complex operations. Its deep relationships with government agencies and growing commercial customer base make Palantir a formidable rival in industrial and national security applications.

C3.ai is another key competitor, offering enterprise AI applications for manufacturing, energy, defense and logistics. Its predictive maintenance, supply-chain optimization and digital transformation solutions help industrial customers improve operational efficiency and reduce costs. While BigBear.ai differentiates itself with mission-focused AI, secure generative AI platforms and digital twin capabilities, Palantir's scale and C3.ai's broad enterprise reach underscore the competitive landscape as demand for industrial AI solutions continues to expand.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have dropped 38.1% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 11.31, as evidenced by the chart below.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has narrowed in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago level of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

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

In the latest close session, BigBear.ai Holdings, Inc. (BBAI - Free Report) was down 3.13% at $3.41. This change lagged the S&P 500's daily loss of 0.01%. Elsewhere, the Dow gained 0.14%, while the tech-heavy Nasdaq lost 0.46%.

The stock of company has fallen by 19.45% in the past month, lagging the Computer and Technology sector's loss of 2.57% and the S&P 500's loss of 1.4%.

The investment community will be closely monitoring the performance of BigBear.ai Holdings, Inc. in its forthcoming earnings report. The company is predicted to post an EPS of -$0.05, indicating a 16.67% growth compared to the equivalent quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $35.24 million, showing a 8.52% escalation compared to the year-ago quarter.

BBAI's full-year Zacks Consensus Estimates are calling for earnings of -$0.25 per share and revenue of $144.31 million. These results would represent year-over-year changes of +69.51% and +13.03%, respectively.

Investors might also notice recent changes to analyst estimates for BigBear.ai Holdings, Inc. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. BigBear.ai Holdings, Inc. is currently sporting a Zacks Rank of #4 (Sell).

The Computers - IT Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 150, this industry ranks in the bottom 39% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

Key Takeaways BBAI trades at a forward P/S of 12.11X, above the industry's 11.89X, despite weak stock performance.BBAI's contract wins, 14% backlog growth and software shift are strengthening its AI growth outlook.BBAI remains unprofitable, with government spending dependence and integration risks weighing on sentiment. BigBear.ai Holdings, Inc. (BBAI - Free Report) currently trades at a forward 12-month price-to-sales (P/S) ratio of 12.11X, modestly above the Zacks Computers – IT Services industry's 11.89X. Although the premium is not excessive, it reflects expectations that the company can deliver faster growth than many of its peers.

BBAI Stock’s Valuation (P/S F12M)

Image Source: Zacks Investment Research

BigBear.ai remains one of the more closely followed pure-play artificial intelligence stocks, thanks to its growing presence in defense, homeland security and border protection. The company is benefiting from rising demand for AI-powered decision intelligence, generative AI and computer vision solutions across government agencies. However, investors continue to debate whether the company's long-term growth potential justifies its premium valuation.

The challenge is that operating performance has yet to fully match those expectations. Shares have plunged 28.1% year to date, underperforming the broader Zacks Computer and Technology sector's 18.2% gain and the S&P 500's 10% increase, although they have held up better than the industry's 21.7% decline. Investors are weighing BigBear.ai's improving business fundamentals against execution risks, persistent losses and a valuation that still leaves little room for disappointment.

BBAI’s Price Performance

Image Source: Zacks Investment Research

BBAI’s AI Strategy Is Gaining TractionBigBear.ai's first-quarter 2026 results showed encouraging progress despite essentially flat revenues. Sales slipped 1% year over year to $34.4 million as lower activity on certain Army programs offset contributions from the Ask Sage acquisition. More importantly, profitability at the gross margin level improved significantly, with gross margin expanding to 34% from 21.3% a year earlier, reflecting a richer mix of higher-margin generative AI software products. The company also reaffirmed its 2026 revenue outlook of $135-$165 million, signaling confidence that growth will strengthen during the rest of the year.

Management continues to focus on two attractive markets—national security and trade & travel—where AI adoption remains in its early stages. Instead of pursuing every enterprise AI opportunity, BigBear.ai is concentrating on mission-critical applications where operational expertise creates a competitive advantage.

Contract Wins Strengthen Growth Outlook for BBAI StockThe company's recent contract momentum supports management's confidence. During the first quarter, BigBear.ai secured a $53 million classified intelligence community contract, won airport security projects at Chicago O'Hare and Dallas-Fort Worth airports, expanded Shipyard AI deployments through contracts with Chantier Davie and Bollinger Shipyards, and added new Ask Sage customers, including NASA, the Army Intelligence and Security Command, and the Naval Research Laboratory. These wins demonstrate growing acceptance of the company's AI technologies across defense and government agencies.

Backlog also increased 14% sequentially to $281.9 million, providing better revenue visibility over the next several quarters. Management expects additional opportunities as procurement activity improves within the Department of Homeland Security following recent budget approvals and organizational changes.

Software Mix Is Improving Margins for BigBear.aiOne of BigBear.ai's biggest positives is its ongoing shift toward software and AI platforms.

Ask Sage has become an important driver of this transition. The platform provides secure generative AI capabilities for government agencies while allowing customers to use multiple AI models without vendor lock-in. During the quarter, Ask Sage introduced a simplified interface and expanded agent-building capabilities to improve customer adoption.

CargoSeer is also broadening BigBear.ai's product portfolio through AI-powered cargo inspection and fraud detection solutions for customs agencies. Combined with Shipyard AI and ProModel, these products should gradually increase recurring software revenue while supporting higher margins than traditional services. Management also completed an organizational restructuring designed to align engineering, sales and customer teams more closely with its highest-priority markets.

BBAI Stock’s Premium Valuation Leaves Limited Margin for ErrorDespite these positives, BigBear.ai's valuation continues to demand strong execution. A forward sales multiple above the industry average suggests investors expect sustained double-digit growth and continued margin expansion. However, current financial results still fall short of that expectation. Revenue growth remains modest, and profitability has not yet reached the level typically associated with premium software companies.

As a result, even relatively small operational disappointments can lead to meaningful stock volatility. This partly explains why BBAI shares have struggled despite positive contract announcements and improving margins.

Losses and Execution Risks Remain Key Concerns for BBAISeveral fundamental challenges continue to weigh on investor sentiment. Although gross margin improved substantially, the company remains unprofitable. Adjusted EBITDA stayed negative during the first quarter as higher selling expenses, acquisition-related amortization and integration costs offset much of the margin improvement. While debt reduction has lowered interest expense, management still needs to demonstrate that revenue growth can outpace operating costs over time.

The business also remains highly dependent on government spending. Contract awards can be delayed by procurement cycles, budget negotiations or administrative approvals, creating uneven quarterly results. Even with a growing backlog, the timing of revenue recognition remains difficult to predict.

Integration risk also deserves attention. BigBear.ai continues integrating Ask Sage and CargoSeer while simultaneously expanding its go-to-market strategy. Successfully converting these acquisitions into faster revenue growth will be critical over the next several quarters.

These uncertainties help explain why the stock has declined sharply this year despite improving operational metrics.

Stronger Balance Sheet Supports Long-Term Growth for BBAIThe company's financial position has improved considerably. BigBear.ai ended the first quarter with approximately $431.5 million in cash and investments after eliminating most of its convertible debt earlier this year. Lower debt reduces future interest expense while giving management greater flexibility to invest in product development, pursue acquisitions and support long-term growth initiatives.

Analysts also expect gradual improvement. During the past 60 days, the Zacks Consensus Estimate for the company's 2026 loss has narrowed to 25 cents per share from 35 cents. Revenues are projected to increase roughly 13% this year and another 13.7% in 2027, while losses are expected to continue narrowing.

BBAI’s Earnings Estimate Revision Trend

Image Source: Zacks Investment Research

Comparing BigBear.ai With Industry PeersBigBear.ai competes with Palantir Technologies (PLTR - Free Report) , C3.ai (AI - Free Report) and Booz Allen Hamilton (BAH - Free Report) , although each company serves the AI market differently.

Palantir continues to lead the government AI market with stronger revenue growth, expanding profitability and significantly larger commercial operations. Its execution has been superior, although its valuation is considerably higher than BigBear.ai's.

C3.ai remains focused on enterprise AI software across both commercial and government customers. It offers broader industry exposure than BigBear.ai but continues to work toward consistent profitability.

Booz Allen Hamilton combines decades of government relationships with expanding AI consulting capabilities. It generates far more stable earnings and cash flows than BigBear.ai, making it a lower-risk alternative for investors seeking exposure to government AI spending.

Buy, Hold or Sell for BBAI Stock?BigBear.ai is making meaningful progress. Contract wins are increasing, backlog continues to expand, software products are becoming a larger part of the business and the balance sheet is significantly stronger than it was a year ago. The improving earnings outlook also reflects better operating momentum.

Nevertheless, investors should recognize that much of the long-term opportunity remains forward-looking. Revenue growth has not yet accelerated meaningfully, profitability remains elusive and dependence on government procurement continues to create execution risk. Given these challenges, the stock's premium valuation appears difficult to justify today.

These factors support the current Zacks Rank #4 (Sell). While BigBear.ai possesses attractive long-term AI assets, investors may be better served waiting for stronger revenue growth, clearer progress toward profitability and a more attractive valuation before becoming more constructive on the stock.

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

BigBear.ai Holdings, Inc. (BBAI - Free Report) ended the recent trading session at $3.83, demonstrating a -2.3% change from the preceding day's closing price. The stock trailed the S&P 500, which registered a daily loss of 0.37%. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, lost 1.33%.

Prior to today's trading, shares of the company had lost 6.22% lagged the Computer and Technology sector's gain of 4.52% and the S&P 500's gain of 2.02%.

Investors will be eagerly watching for the performance of BigBear.ai Holdings, Inc. in its upcoming earnings disclosure. The company is expected to report EPS of -$0.05, up 16.67% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $35.24 million, indicating a 8.52% increase compared to the same quarter of the previous year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of -$0.25 per share and revenue of $144.31 million, indicating changes of +69.51% and +13.03%, respectively, compared to the previous year.

It is also important to note the recent changes to analyst estimates for BigBear.ai Holdings, Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. BigBear.ai Holdings, Inc. presently features a Zacks Rank of #4 (Sell).

The Computers - IT Services industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 165, placing it within the bottom 33% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Key Takeaways BigBear.ai reaffirmed 2026 revenue guidance of $135-$165M despite essentially flat first-quarter sales.BigBear.ai's backlog rose 14% sequentially to $281.9M, led by a $53M classified contract.Ask Sage helped lift BigBear.ai's gross margin to 34% in Q1 from 21.3% a year earlier. BigBear.ai Holdings, Inc. (BBAI - Free Report) remains confident in its 2026 outlook despite reporting essentially flat first-quarter 2026 revenues, supported by a strengthening backlog, major contract wins and growing demand for its higher-margin AI products. The company reaffirmed its full-year revenue guidance of $135-$165 million, signaling management’s confidence in a stronger performance over the remainder of the year.

A key reason behind this optimism is the company's growing backlog, which increased 14% sequentially to $281.9 million. The increase was driven primarily by a $53 million sole-source classified contract with an intelligence community customer, highlighting BigBear.ai’s strong position in national security markets. During the quarter, the company also secured new wins across trade and travel, Shipyard AI and Ask Sage, demonstrating momentum across its targeted growth areas.

Management continues to focus on two core markets — national security and trade & travel — where demand remains favorable. The company sees opportunities from increasing defense modernization efforts, border security investments and growing adoption of AI-powered decision-making tools. Positive developments at the Department of Homeland Security, including improved funding visibility and ongoing bid activity, could create additional contract opportunities in the coming quarters.

Another encouraging sign is the ongoing shift toward technology-based revenues. Ask Sage, the company’s generative AI platform, is helping increase exposure to higher-margin software and platform offerings. This contributed to gross margin expansion to 34% in the first quarter from 21.3% a year ago. Meanwhile, the successful integration of Ask Sage and CargoSeer, combined with a strong cash and investment position of more than $431 million, provides additional resources to pursue growth initiatives.

Taken together, these factors explain why BigBear.ai believes it remains on track to achieve its 2026 objectives.

The Competitive Landscape for BigBear.aiWhile BigBear.ai operates in a niche focused on defense, homeland security and decision intelligence, it faces competition from larger AI and analytics providers that are also benefiting from growing government technology spending.

One notable competitor is Palantir Technologies (PLTR - Free Report) . It continues to expand its presence across defense, intelligence and government agencies through its AI-powered data analytics platforms. Palantir's strong government relationships, expanding commercial business and growing adoption of its Artificial Intelligence Platform make it a formidable competitor. However, unlike Palantir, BigBear.ai remains more narrowly focused on mission-ready AI applications for national security and border-related use cases.

Another key rival is C3.ai (AI - Free Report) . The company provides enterprise AI applications to government and defense customers and continues to invest heavily in generative AI offerings. C3.ai is pursuing opportunities tied to federal modernization and defense digital transformation initiatives. While C3.ai benefits from a broad AI portfolio, BigBear.ai differentiates itself through its operational expertise in homeland security, trade and travel and intelligence missions.

As government agencies accelerate AI adoption, BigBear.ai, Palantir and C3.ai are all competing for a larger share of federal technology spending, though BigBear.ai's specialized focus could help it capture targeted growth opportunities.

BBAI Stock’s Price Performance, Valuation Trend & EPS Estimate TrendShares of BBAI have trended 5.1% upward over the past three months, outperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 3-Month Price Performance

Image Source: Zacks Investment Research

BBAI stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 12.95, as evidenced by the chart below.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has narrowed in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago level of 82 cents per share.

EPS Trend of BBAI

Image Source: Zacks Investment Research

BigBear.ai Holdings, Inc. (BBAI) Q1 2026 Earnings Call Prepared Remarks Transcript

Key Takeaways BigBear.ai Q1 gross margin jumped to 34% as generative AI platform revenues expanded.BBAI backlog rose 14% sequentially to $281.9M on defense and airport security contracts.BigBear.ai strengthened its liquidity position after converting most 2029 notes into equity. BigBear.ai Holdings, Inc. (BBAI - Free Report) is doubling down on generative AI, and early signs suggest the strategy is beginning to reshape its revenue mix in a meaningful way. While first-quarter 2026 revenues dipped slightly year over year to $34.4 million, the company delivered a sharp improvement in gross margin, which expanded 1,278 basis points to 34%. The primary driver was the higher-margin generative AI platform revenues tied to the Ask Sage acquisition.

BigBear.ai’s acquisition of Ask Sage in late 2025 appears to be more than just a technology add-on. The platform is already helping the company transition away from lower-margin services and work toward scalable AI-driven products. In the quarter, Ask Sage secured contracts with NASA, the Army Intelligence & Security Command and the Naval Research Lab, reinforcing BigBear.ai’s growing relevance in mission-critical AI deployments. BBAI is also benefiting from rising demand across national security and trade-and-travel markets. A $53 million classified intelligence contract, airport security wins at Chicago O’Hare and Dallas-Fort Worth, and growing traction for Shipyard AI collectively pushed backlog 14% higher sequentially to $281.9 million.

Importantly, BBAI strengthened its balance sheet significantly after converting most of its 2029 notes into equity, ending the quarter with $431.5 million in cash and investments. That liquidity gives management flexibility to pursue additional AI investments and strategic expansion initiatives.

Still, risks remain. Revenue growth remains uneven, operating losses persist and SG&A expenses climbed sharply due to integration and growth investments. Yet, if BigBear.ai can continue shifting toward higher-margin generative AI contracts, its evolving revenue mix could become a far more compelling long-term growth story.

BigBear.ai, Palantir & Booz Allen Hamilton Battle for AI EdgeBigBear.ai is banking on AI-powered decision intelligence and so are the market competitors, including Palantir Technologies Inc. (PLTR - Free Report) and Booz Allen Hamilton Holding Corporation (BAH - Free Report) . However, their competitive positioning differs sharply.

BigBear.ai remains a niche, but fast-evolving player focused on defense, border security and autonomous decision-making platforms such as ConductorOS and Ask Sage. On the other hand, Palantir operates at a far greater scale with deeply integrated AI and data platforms like Gotham, Foundry and AIP, enabling governments and enterprises to unify massive datasets, automate workflows and deploy large language models securely. While Palantir leads in scale and platform monetization, BBAI is positioning itself as a specialized AI innovator targeting high-growth defense and intelligence niches.

On the other hand, Booz Allen Hamilton takes a more consulting-driven approach, blending AI software, cybersecurity and analytics with long-standing federal advisory relationships. Unlike BigBear.ai’s product-heavy model or Palantir’s platform dominance, Booz Allen Hamilton leverages hybrid consulting-and-engineering capabilities to deliver enterprise-scale digital modernization programs.

BBAI Stock’s Price Performance & Valuation TrendShares of this Virginia-based AI-powered decision intelligence solutions provider have inched up 2% in the past three months, outperforming the Zacks Computers - IT Services industry, but underperforming the Zacks Computer and Technology sector and the S&P 500 index.

Image Source: Zacks Investment Research

BBAI stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 13.31, as evidenced by the chart below.

Image Source: Zacks Investment Research

EPS Trend of BBAIBBAI’s bottom-line estimates for 2026 and 2027 reflect a loss per share of 25 cents, which has narrowed over the past 30 days, and 19 cents, which has remained stable over the same time frame, respectively. However, the revised estimates for 2026 and 2027 indicate year-over-year growth of 69.5% and 24%, respectively.

Image Source: Zacks Investment Research

Many artificial intelligence (AI) stocks skyrocketed over the past few years as more companies embraced AI-powered analytics services, generative AI platforms, and agentic AI tools. That boom should continue for the foreseeable future, driving the market's top AI stocks even higher.

Yet not every AI stock that glitters is gold. Let's see which two AI stocks you should avoid in this wobbly market -- and which high-flying AI stock is still worth buying today.

Image source: Getty Images.

BigBear.ai (BBAI +0.37%) and C3.ai (AI +0.65%) both develop AI modules that can be plugged into an organization's existing software infrastructure to analyze and automate certain tasks.

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BigBear.ai's modules are designed for edge networks, and it generates most of its revenue from government and defense contracts. C3.ai's modules are designed for a broader range of computing platforms and serve a more diverse mix of enterprise and government clients.

From 2021 to 2025, BigBear.ai's revenue declined from $146 million to $128 million, while its net loss widened from $124 million to $294 million. That decline was caused by the bankruptcy of its top customer, Virgin Orbit, competition from similar AI companies, and fierce macro headwinds. BigBear.ai's sales slumped even after it acquired the AI vision firm Pangiam in 2024, won several new government contracts, and the broader AI market expanded.

From 2025 to 2027, analysts expect BigBear.ai's revenue to grow at a 12% CAGR to $159 million, but most of that growth will come from its recent acquisition of the generative AI platform provider, Ask Sage. With a market cap of $2.1 billion, this lackluster AI stock still trades at 15 times this year's sales -- and it could sink much lower in a messy market downturn.

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From fiscal 2022 to fiscal 2025 (which ended last April), C3.ai's revenue jumped from $183 million to $389 million, but its net loss widened from $56 million to $289 million. Its top line grew as it launched new generative AI modules, gained more government contracts, and renewed a key joint venture with Baker Hughes through 2028. However, its gross margins shrank as it relied more heavily on lower-margin services and usage-based fees (rather than its stickier subscriptions) to drive its sales. It also faced stiff competition from similar companies.

From fiscal 2025 to fiscal 2028, analysts expect C3.ai's revenue to drop from $389 million to $251 million as it loses ground to its competitors, disrupts its own sales teams with a major restructuring, and cannibalizes its own subscriptions with its usage-based plans. With a market cap of $1.3 billion, C3.ai might not seem expensive at five times this year's sales, but its upside will remain limited as long as it can't resolve its most pressing problems.

The AI stock to buy: Broadcom Broadcom (AVGO +1.25%) sells a wide variety of chips and infrastructure software. It aggressively expanded both segments with big acquisitions over the past decade.

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376.75

From fiscal 2021 to fiscal 2025 (which ended last November), Broadcom's revenue and adjusted earnings before interest, taxes, and depreciation (EBITDA) grew at CAGRs of 24% and 27%, respectively. Most of Broadcom's recent growth came from its sales of customized application-specific integrated circuits (ASICs) for AI applications. Its top hyperscaler customers -- including Meta and Alphabet -- work with the company to create customized ASICs for their own data centers to boost efficiency, cut costs, and curb their long-term dependence on Nvidia's GPUs.

In fiscal 2025, its sales of AI chips surged 65% to $20 billion, accounting for 31% of its top line and offsetting its slower sales of non-AI chips and infrastructure software. It expects that figure to soar to $60-$90 billion by the end of fiscal 2027 as the AI market expands.

From fiscal 2025 to fiscal 2028, analysts expect Broadcom's revenue and adjusted EBITDA to both grow at a 48% CAGR. Its enterprise value of $2.1 trillion might seem high, but it still looks surprisingly cheap at 18 times next year's adjusted EBITDA. That makes it a much better play than C3.ai or BigBear.ai on the ongoing AI boom.