Can BigBear.ai Ride the Next Wave of Defense Technology?

BigBear.ai Holdings, Inc. BBAI is positioning itself to capitalize on rising investments in defense modernization, autonomous systems and artificial intelligence (AI)-powered national security solutions. Growing demand for mission-ready AI, expanding government relationships and strategic acquisitions could strengthen the company's long-term growth prospects. However, converting these opportunities into sustainable profitability remains a challenge.

Defense AI Adoption Creates Growth Opportunities

BigBear.ai is expanding its presence in military and intelligence applications through its Ask Sage generative AI platform and ConductorOS autonomous systems software.

The company secured a contract with Naval Air Systems Command to support AI applications for the U.S. Navy and Marine Corps. Its expanded Ask Sage platform also enables secure AI deployment in disconnected environments, supporting missions involving sensitive information.

Meanwhile, ConductorOS allows operators to coordinate multiple drones and autonomous systems from different manufacturers. Successful demonstrations during U.S. military exercises highlight its potential in modern warfare.

Management identified more than $70 billion in proposed U.S. fiscal 2027 spending on drone and counter-drone technologies, indicating substantial market opportunities.

Contract Wins and Financial Strength Support Expansion

BigBear.ai secured more than 20 contracts during the second quarter of 2026, with individual values reaching $5 million. Backlog increased 9% from year-end 2025 to $269.6 million.

Quarterly revenues rose 13% year over year to $36.7 million, while gross margin expanded 781 basis points to 32.8%. Management reaffirmed its 2026 revenue guidance of $135-$165 million.

The company's $409.8 million in cash and investments provides financial flexibility for acquisitions and product development.

Can BigBear.ai Overcome Execution Risks?

Despite improving revenues, BigBear.ai reported a $25.7 million net loss, while adjusted EBITDA loss widened to $11.6 million. Negative operating cash flow, rising expenses and government contract uncertainties remain concerns.

Overall, BigBear.ai appears well-positioned to benefit from expanding defense AI investments, but sustained contract execution, stronger cash generation and progress toward profitability will determine whether its growth opportunities translate into lasting shareholder value.

How Are BigBear.ai's Rivals Positioned in Defense AI?

Palantir Technologies PLTR is strengthening its position in defense technology through its Artificial Intelligence Platform and Maven Smart System. Palantir's Maven platform helps military personnel analyze battlefield intelligence, identify threats and improve operational decisions. The Pentagon's decision to designate Maven as a program of record strengthens Palantir's long-term government relationships and revenue visibility. Palantir's established defense partnerships and expanding AI capabilities provide a competitive advantage in securing large military contracts.

C3.ai AI is also expanding its defense AI presence through predictive maintenance, operational intelligence and military asset management solutions. C3.ai secured an expanded U.S. Air Force contract with a ceiling of $450 million to support AI-powered predictive maintenance across aircraft and defense systems. Its growing relationships with federal agencies create additional opportunities. C3.ai's enterprise AI expertise and established military applications position it to capture defense modernization spending, intensifying competition for BigBear.ai.

BBAI’s Price Performance, Valuation & EPS Estimate Trend

Shares of BigBear.ai have plunged 39.5% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance

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 6.97, as evidenced by the chart below.

The Zacks Consensus Estimate for BBAI’s 2026 and 2027 loss per share has been unchanged in the past 60 days, respectively, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share for 2026.

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.

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This article originally published on Zacks Investment Research (zacks.com).