BBAI Stock Down 25% Post Q4 Earnings: Is it Time to Let Go?

Bigbear.ai (BBAI Quick QuoteBBAI – Free Report) shares have plunged 25.2% since the company reported its fourth-quarter 2024 earnings on March 6. The underperformance can be attributed to a wider-than-expected net loss of $108 million, significantly higher than the year-ago quarter’s loss of $21.3 million and a disappointing 2025 outlook.

For 2025, BigBear.ai projects revenues between $160 million and $180 million. The company anticipates a negative adjusted EBITDA in the single-digit millions, raising concerns about its path to profitability.

For the fourth quarter of 2024, BBAI reported revenues of $43.8 million, which missed the Zacks Consensus Estimate by 19.09% but increased 8% year over year.

Overall, BBAI shares have plunged 30.8% in the year-to-date period compared with the Zacks Computer & Technology sector’s decline of 9.7%. The Zacks Computers – IT Services industry has risen 11% during the same time frame. 

Year-to-Date Performance

Image Source: Zacks Investment Research

Can BBAI’s expanding product portfolio and strong partner base help the stock recover in 2025? Let’s dig deep to find out.

BBAI Secures Key Government AI Contracts for Growth

BBAI’s positive momentum is supported by its ability to capitalize on the growing government investment in artificial intelligence (AI) solutions. The increasing government interest bolsters BBAI’s innovation pipeline and allows it to adapt and extend its capabilities to serve a larger market.

BBAI recently secured a 3.5-year, $13.2 million sole-source contract from the U.S. Department of Defense (DoD) to support the Chairman of the Joint Chiefs of Staff’s Directorate for Force Management (J-35). 

Under this contract, BigBear.ai will enhance and maintain the ORION Decision Support Platform (DSP), an AI-driven force management and analytics system that provides real-time operational insights and strategic planning capabilities to the DoD’s Joint Planning and Execution Community.

BBAI also secured a contract from the DoD’s Chief Digital and Artificial Intelligence Office to advance its Virtual Anticipation Network prototype. 

The initiative will enhance the DoD’s ability to assess media trends from potential foreign adversaries, supporting faster and more informed national security decisions through advanced AI analytics. This aligns with BBAI’s strategy of delivering impactful AI solutions for critical government applications.

BBAI Expands With Rich Partner Base

BigBear.ai’s focus on expanding its product portfolio has helped it win clients. Its products have been integrated into the solutions of Proof Labs, Autodesk (ADSK Quick QuoteADSK – Free Report) , Amazon (AMZN Quick QuoteAMZN – Free Report) and Palantir (PLTR Quick QuotePLTR – Free Report) .

In December 2024, BigBear.ai announced a collaboration with Proof Labs to develop the Cyber Resilient On-Orbit solution for the Department of the Air Force. The solution will leverage Proof Labs’ SpaceCREST technology for AI/ML-driven real-time cyber intrusion detection and anomaly monitoring of U.S. Space Force satellite networks.

AMZN’s cloud platform, Amazon Web Services (“AWS”), integrated BBAI’s ProModel solution to build AWS ProServe, enabling it to provide AI-driven warehousing.

Autodesk, Amazon and Palantir are the industry’s undisputed leaders. These giants’ adoption of BBAI’s products reflects the quality assurance of its product suite.

Earnings Estimates Show Mixed Trend for BBAI

The Zacks Consensus mark for 2025 loss per share is pegged at 22 cents, which has widened by a couple of pennies in the past 60 days. 

Image Source: Zacks Investment Research

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Conclusion: Time To Let Go BBAI Stock for Now

Despite its growing portfolio and strategic partnerships, BBAI faces intense competition in the AI market. The challenging macroeconomic environment and losses from the Virgin Orbit bankruptcy are likely to affect the company’s performance.

BigBear.ai’s heavy reliance on government contracts exposes it to risks associated with unpredictable spending patterns and potential shifts in national security priorities. This dependence contributes to revenue volatility and investor uncertainty. The recent defense budget cut clearly shows this risk and could significantly impact BBAI’s operations.

The Trump administration’s announcement of a $50 billion defense budget cut poses a direct threat to BigBear.ai’s core business, given its dependence on government contracts in the defense sector.

BBAI has also become known for its annual boom-and-bust cycle, where the stock price experiences sharp surges followed by steep declines. This volatility makes the stock a risky bet for investors. 

BBAI currently carries a Zacks Rank #4 (Sell), which implies that investors should stay away from investing in this stock at present. 

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