BigBear.ai Before Q2 Earnings: Buy, Sell or Hold the Stock?

BigBear.ai reported a loss per share of 8 cents, which came in line with the Zacks Consensus Estimate but narrower than the year-ago level of a loss per share of 25 cents. While adjusted EBITDA declined due to higher growth investments, BigBear.ai reaffirmed its full-year 2026 revenue guidance of $135-$165 million, reflecting confidence in its growth outlook.

This artificial intelligence (AI) provider surpassed earnings estimates in two of the trailing four quarters and missed on one and met on one occasion, with an average surprise of 4.4%, as shown below.

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How Are Estimates Placed for BigBear.ai Stock?

The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged at a loss of 4 cents over the past 60 days. The estimated figure indicates a narrower loss from the year-ago reported loss of 6 cents per share. The consensus mark for revenues is pegged at $36.4 million, suggesting 12% year-over-year growth.

For 2026, BigBear.ai is expected to register a 14.8% increase in revenues from a year ago. Its bottom line is expected to witness a loss of 25 cents per share, which is narrower than the 2025 figure of an 82-cent loss.

BBAI’s Earnings Estimate

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BBAI’s Revenue Estimate

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AI Platforms and Contract Execution to Drive Revenues

Second-quarter revenues are expected to benefit from the execution of recently awarded contracts, including a classified intelligence community program, airport security deployments and additional work related to Shipyard AI and Ask Sage. Management has also highlighted a stronger pipeline supported by improving Department of Homeland Security funding, an enhanced go-to-market structure and increasing opportunities across defense and border security. These factors are expected to support revenue growth through the remainder of 2026.

National Security and Trade & Travel Are Key Growth Engines

BigBear.ai continues to prioritize National Security and Trade & Travel as its two core growth markets. During the second quarter, investors will look for progress in deploying Ask Sage across government agencies, commercialization of the platform beyond federal customers and continued adoption of CargoSeer's AI-powered inspection capabilities. Management also expects organizational realignment to improve customer engagement and accelerate solution delivery.

Product Mix Could Support BBAI’s Q2 Margins

Margins are expected to remain supported by a richer mix of software and AI platform revenues, particularly from Ask Sage, which carries higher profitability than traditional services. However, continued investments in research and development, sales expansion, marketing initiatives and integration of recent acquisitions may limit the pace of operating margin improvement during the quarter.

What the Zacks Model Unveils for BigBear.ai Stock

Our proven model does not conclusively predict an earnings beat for BigBear.ai for the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for this to happen, which is not the case here, as you will see below.

Earnings ESP: BBAI has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

BBAI Stock’s Price Performance

BigBear.ai stock has lost 47.6% year to date, lagging the Zacks Computers - IT Services industry, the Zacks Computer & Technology sector and the S&P 500 Index.

BBAI Stock’s Performance

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BigBear.ai competes with Palantir Technologies Inc. PLTR, C3.ai, Inc. AI and Parsons Corporation PSN across AI-powered decision intelligence, defense technology, homeland security and mission-critical software markets. So far this year, all three peers have faced selling pressure, with Palantir declining 26%, C3.ai falling 34.6% and Parsons slipping 3.8%.

BBAI Stock’s Valuation

In terms of the forward 12-month price/sales (P/S), BBAI stock is currently trading at a discount to its industry, as shown below.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry

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At 8.66X forward 12-month sales, BigBear.ai trades below Palantir Technologies at 33.08X, reflecting a substantially more conservative valuation despite operating in similar AI-driven defense and national security markets. However, its multiple remains above C3.ai at 6.06X and Parsons at 0.92X, indicating investors are assigning a premium for BigBear.ai's higher-growth, mission-ready AI strategy and expanding generative AI platform. The current valuation suggests the market recognizes the company's long-term growth potential but remains cautious about execution and profitability. Continued progress in scaling Ask Sage, converting its growing backlog into revenue and securing additional defense and homeland security contracts could support further multiple expansion over time.

Why Is BBAI Stock a Hold for Now?

The company continues to benefit from a growing backlog, expanding adoption of its Ask Sage platform and steady demand across defense and homeland security markets, while analysts expect narrower losses and double-digit revenue growth. Although execution risks remain, its reasonable valuation relative to key AI peers and improving business fundamentals support a balanced risk-reward profile. Investors should maintain their positions and watch for further progress in contract execution, AI platform adoption and margin expansion.

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

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