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BigBear.ai has been a popular artificial intelligence stock for retail investors to own over the past year.
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The business has experienced a choppy growth rate, however, and its revenue was up just 5% last quarter.
BigBear.ai (NYSE: BBAI) is a volatile stock to own. In each of the previous two years, its shares more than doubled. But the start to 2025 has been bumpy, to say the least. Shares of BigBear.ai are falling and the stock is down more than 15%.
The business is still growing and has some promising potential as companies invest heavily into artificial intelligence (AI). But there is also some risk, given its persistent losses. Is this an AI stock that you should consider buying today, or is more of a decline likely for BigBear?
BigBear is growing, but is it enough to win over investors?
There is a lot of promise for BigBear related to AI as its predictive analytics and modeling help companies make smarter, more efficient decisions in their day-to-day operations. It secured government contracts and its rich valuation has me wondering if in the future it may follow in the footsteps of another data analytics stock -- Palantir Technologies. But for it to soar in valuation, what may need to take off first is its growth rate, which remains underwhelming.
While there has been some volatility in its growth rate, the highest it reached in the past three years was just 22%. And through the first three months of 2025, its revenue only rose by 5% to $34.8 million.
This is not the type of growth investors might expect from a business that should benefit from an uptick in AI-related spending. Without greater consistency, investors are likely to question just how promising the business is and how much value it is adding for its customers.
The company's bottom line isn't showing improvement
Another problem is that BigBear also doesn't look to be making any progress with respect to its bottom line. While the company's operating loss did appear to show a significant improvement in Q1, going from a loss of $98 million in the prior-year period to just a $21 million loss this past quarter, that was primarily due to a goodwill impairment charge of $85 million a year ago; there was no such charge this quarter. And if you strip that out, then the prior-year period's operating loss would have totaled $13 million.
BigBear has been incurring a higher rate of costs both on the administrative side as well as with respect to research and development. There aren't any noticeable signs of improvement in terms of controlling costs. And at this stage, it's difficult to see a path to profitability.