BigBear.ai’s Stock Surge: Why a Leading Investor Recommends Holding Off on Buying

BigBear.ai (NYSE: BBAI) has been generating excitement in the market, with its stock price nearly doubling in value since the start of 2025. The surge has been largely driven by a high-profile deal with the U.S. Department of Defense, which is looking to leverage BigBear.ai’s artificial intelligence for enhanced geopolitical risk assessments. But not everyone is convinced about the stock’s future.

A Quick Rise Fuelled by AI and Defense Contracts

BigBear.ai’s recent surge has attracted attention from those eager to invest in the booming AI sector. The company’s partnership with the U.S. Department of Defense and the broader AI hype have drawn comparisons between BigBear.ai and industry giant Palantir, a leader in data analytics. Many investors are hoping that BBAI could become a similar force in the data analytics field.

However, some experts are urging caution. James Foord, a highly-ranked investor with a strong track record, has advised against buying into the current enthusiasm surrounding the stock.

Key Differences Between BigBear.ai and Palantir

While there are surface-level similarities between BBAI and Palantir, Foord highlights several critical differences that make BigBear.ai a riskier proposition.

First, BBAI lacks the profitability that Palantir has enjoyed for years. While Palantir posted a substantial $2.8 billion in revenue for 2024, BigBear.ai earned only $165 million. Moreover, Palantir is known for its comprehensive suite of proven products, with a clear and established market presence. In contrast, BBAI’s product offerings are still developing, particularly in the commercial sector, and the company has yet to demonstrate sustainable positive cash flow.

Additionally, Palantir enjoys positive free cash flow and has avoided the need for shareholder dilution. BigBear.ai, on the other hand, remains in the negative cash flow territory, meaning it may face challenges raising capital without further diluting its stock.

Foord also points out that BBAI lacks a compelling differentiator like Palantir’s unique ontology technology, which is widely recognized in the industry.

Investor Caution: Wait for the Hype to Settle

While Foord acknowledges that BigBear.ai does hold long-term potential, he cautions investors to wait for the stock to stabilize. The recent price surge is driven largely by speculation, and Foord believes it’s unwise to jump into the stock at this time. He recommends waiting for a price retracement before considering an investment.

For now, Foord rates BBAI shares as a “Sell,” citing the company’s financial position and the increasing competition from more established players like Palantir.

Wall Street’s View: Moderate Buy Rating, But Risks Remain

Despite BigBear.ai’s impressive stock rally, most analysts are taking a more cautious approach. The stock has a “Moderate Buy” consensus rating from analysts, but with only two covering the stock. The average price target sits at $7.50, which would imply a 6% downside from the stock’s current level.

As a result, investors may want to proceed with caution as the stock has already surpassed analysts’ 12-month targets. Whether analysts adjust their targets in the wake of the stock’s recent momentum remains to be seen.

Key Takeaways:

• Stock Surge: BigBear.ai’s stock has nearly doubled in value in 2025, thanks to its deal with the U.S. Department of Defense.
• Comparison to Palantir: While comparisons to Palantir have been made, significant differences—such as profitability and product portfolio—make BBAI a riskier investment.
• Investor Advice: James Foord suggests waiting for a stock price correction before investing, as the hype may be driving the surge.
• Wall Street Consensus: Analysts have a Moderate Buy rating on BBAI, but the stock is already above the 12-month price target, suggesting potential risks.

BigBear.ai’s recent surge has stirred excitement among investors looking to capitalize on the AI boom. However, as hype often drives volatility, it’s important to approach the stock with caution. While the company has exciting growth prospects, especially with its AI-driven technology, its financials and lack of a clear competitive edge present risks that investors should consider.

It might be worth waiting for the stock to retrace to a more reasonable level before diving in. Always remember: sometimes the biggest opportunities lie in waiting for the hype to die down.

What Do You Think?

Do you agree with the cautionary stance on BigBear.ai? Share your thoughts in the comments below and stay tuned for more updates on emerging tech stocks!