BigBear.ai Holdings, a provider of artificial intelligence (AI)-powered decision intelligence solutions, has found itself in the spotlight for all the wrong reasons this summer. Despite a federal government eager to ramp up spending on AI and border control, the company’s latest earnings report sent its stock tumbling, raising tough questions about its near-term prospects. Investors and analysts alike are now weighing whether BigBear.ai’s current struggles are a sign of deeper trouble or simply a temporary setback in a sector teeming with promise.
On August 29, 2025, BigBear.ai reported its second-quarter results, revealing sales of $32.5 million—an 18% decline compared to the same period last year, as reported by The Motley Fool. The company also posted a staggering net loss of $228.6 million, a massive jump from the $14.4 million loss it recorded in Q2 2024. According to BigBear.ai, this ballooning deficit was largely due to non-cash changes in derivative liabilities totaling $135.8 million related to 2029 warrants, as well as a non-cash goodwill impairment of $70.6 million.
Perhaps even more concerning for investors, BigBear.ai withdrew its adjusted EBITDA guidance, citing uncertainty around key Army programs and anticipated growth investment spending in the latter half of the year. As a result, the stock plummeted by 28% over the past month, a sharp reversal for a company that had been up 14% year-to-date as of August 31, 2025, according to TipRanks.
BigBear.ai’s business is heavily tied to federal government contracts, particularly with defense and intelligence agencies. The company’s most significant deal is a $165 million contract with the U.S. Army to modernize and incorporate AI into military platforms, enabling commanders to make more data-driven decisions in training and deployment. The company is also involved in a host of biometric software initiatives at major international airports—including those in Chicago, Los Angeles, New York, Denver, Dallas, and Charlotte, North Carolina—aimed at enhancing passenger processing and border control.
Management sees a $70 billion opportunity stemming from increased funding for U.S. Customs and Border Protection, and a $673 million opportunity from investments in biometric border controls. Internationally, BigBear.ai is forging new partnerships, such as recent AI projects in the United Arab Emirates in collaboration with Easy Lease PJSC and Vigilix Technology Investment.
Yet, despite these seemingly robust opportunities, the company’s recent performance has left investors wary. The Motley Fool notes that while Palantir Technologies—a major competitor in the government AI space—reported quarterly revenue exceeding $1 billion for the first time in Q2 2025 and saw a 48% year-over-year revenue jump, BigBear.ai’s revenue is moving in the opposite direction. Palantir’s ability to secure 157 deals valued at more than $1 million each in the second quarter alone stands in stark contrast to BigBear.ai’s heavy reliance on its large Army contract.
Still, there are some rays of hope for BigBear.ai. According to TipRanks, Wall Street analysts remain cautiously optimistic about the company’s long-term growth potential, even in the face of short-term turbulence. Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated a Buy rating on BigBear.ai stock following the Q2 report and nudged his price target up to $6 from $5. Ruykhaver pointed to strong progress on key initiatives, including core product development and improvements to the company’s balance sheet. Notably, BigBear.ai ended the quarter with a backlog of $380 million, representing a 42.9% increase compared to the previous year.
Ruykhaver also highlighted several catalysts that could drive growth in the coming years, such as the acquisition of Pangiam to bolster the company’s vision AI capabilities and a strategic shift toward targeting higher-margin commercial customers. “We believe BigBear.ai is well-positioned to establish itself as a leading AI/ML platform provider in the intelligence space,” Ruykhaver stated, as reported by TipRanks.
H.C. Wainwright analyst Scott Buck echoed this cautiously bullish sentiment, reaffirming a Buy rating on BigBear.ai stock, though he lowered his price target to $8 from $9. Buck argued that while the Q2 results were disappointing, they were not entirely unexpected given that many defense-sector peers also experienced program delays. He anticipates that revenue visibility will improve as the company moves into 2026, particularly as it stands to benefit from the One Big Beautiful Bill—a legislative package that significantly boosts investment in areas closely aligned with BigBear.ai’s core competencies.
Despite the recent selloff, Wall Street’s consensus rating for BigBear.ai remains a Moderate Buy, based on two Buy and one Hold recommendations. The average price target of $5.83 suggests a potential upside of 15% from current levels, according to TipRanks.
Of course, not everyone is convinced. Critics argue that BigBear.ai’s heavy dependence on a single large Army contract makes it vulnerable should that revenue stream dry up. The Motley Fool’s analysis points out that while Palantir’s price-to-sales ratio is a lofty 117, BigBear.ai’s is a much more modest 9—making it look like a bargain on paper. However, without a broader base of contracts and more consistent revenue growth, some investors remain skeptical about the company’s viability. As The Motley Fool put it, “I am deeply skeptical of BigBear.ai at this point because it’s not showing that it has enough contracts to be viable.”
Meanwhile, BigBear.ai has been quick to assure stakeholders that it is taking steps to address its challenges. The company cited disruptions in federal contracts due to efficiency efforts as a key reason for its slashed full-year revenue outlook. At the same time, management remains focused on expanding its commercial customer base, capitalizing on the ongoing AI boom, and leveraging its growing backlog to drive future growth.
For investors, the dilemma is clear: Is BigBear.ai a promising AI play poised for a comeback, or does its recent performance signal more trouble ahead? The answer may depend on whether the company can successfully diversify its revenue streams, execute on its commercial ambitions, and ride the wave of increased government and private investment in artificial intelligence. With Wall Street analysts split but leaning cautiously positive, and with the stock still up year-to-date despite the recent plunge, BigBear.ai’s next moves will be closely watched by those betting on the future of AI in both government and commercial sectors.
For now, BigBear.ai’s story is one of potential and peril—a company at a crossroads as it navigates the challenges and opportunities of an AI-driven world.
