Robert Izquierdo, The Motley Fool
5 min read
In This Article:
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BigBear.ai shares had huge price gains before various factors drove the stock downward.
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The company's primary revenue stream comes from delivering artificial intelligence to the U.S. government.
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BigBear.ai experienced year-over-year sales growth in the first quarter, but the company isn't profitable.
The hot artificial intelligence (AI) market has birthed a number of high-flying AI stocks. One of these is BigBear.ai (NYSE: BBAI).
The company's share price soared more than 200% over the past 12 months through June 18. The stock hit a 52-week high of $10.36 in February after President Donald Trump announced Project Stargate, which aims to invest billions of dollars into the AI sector.
Since then, BigBear.ai stock is down more than 50% from its peak. Does this present an opportunity to scoop up the company's shares for cheap?
A confluence of factors led to the decline in BigBear.ai stock this year. One is Wall Street's concerns about the unpredictable macroeconomic environment, exacerbated by the Trump administration's tariff approach.
On top of that, the federal government is cutting budgets. This is worrying because BigBear.ai delivers AI solutions centered around national security and infrastructure. Consequently, the bulk of company revenue comes from federal government contracts.
Adding to this mix, in March, BigBear.ai disclosed a material weakness in its internal controls for financial reporting, contributing to the company's share price decline. As a result, the company restated the last few years' worth of financial statements. While unrelated, CFO Julie Peffer departed in June.
This wasn't 2025's only leadership change. In January, BigBear.ai gained a new CEO, Kevin McAleenan, who had served as Acting Secretary of the U.S. Department of Homeland Security during President Trump's first term.
BigBear.ai's leadership changes may be a good outcome over the long run. McAleenan's experience with the previous Trump administration could help BigBear.ai survive the government budget cuts.
In addition, under the previous CEO, the company fell short of its 2024 goal to achieve at least $165 million in sales, coming in at $158.2 million last year. With McAleenan taking over, perhaps BigBear.ai can meet its 2025 full-year revenue target, which ranges between $160 million and $180 million. He will have to succeed to win shareholder confidence in his leadership.
