BigBear.ai Pivots to Commercial Use: Is It a Risky Expansion?

BigBear.ai Holdings, Inc.’s BBAI strategic shift toward the commercial sector comes with its pros and cons. In the short term, this strategic shift indeed possesses financial and execution risks. But if long-term is considered, diversification of the service portfolio, away from defense and government projects, allows the company to expand market share and creates a new revenue stream, solidifying its profitability structure and margin expansion trends. In the first quarter of 2025, its revenues grew 5% year over year to $34.8 million, with gross margin expanding 20 basis points to 21.3%.Notably, the Pangiam acquisition enables BBAI to explore the commercial sector globally (especially airports and ports), offering the latter a strong Vision AI portfolio focused on travel, trade and identity. One of the widely demanded commercial AI solutions, Pangiam Threat Detection, is a strategic addition to BBAI’s portfolio, which strengthens its market share in the commercial sector. Moreover, BigBear.ai’s other commercial and software solutions, including veriScan, Trueface, Pro Model AI, ConductorOS and Shipyard.ai, offer it a competitive edge across the market.Currently, the company is focusing on introducing accretive innovations that align with its strategic shift toward commercial use, resulting in backlog growth. Besides, BBAI is more focused on its long-term growth regarding this strategic shift, as it is grabbing onto opportunities that offer large multi-year programs and deep commercial relationships. The company believes that in doing so, it will ensure stable compounding value over time. As of March 31, 2025, BBAI’s backlog grew 30% year over year to $384.9 million.BBAI Stock’s Price Performance vs Other Market PlayersShares of this Virginia-based AI-powered decision intelligence solutions provider have soared 117% in the past three months, significantly outperforming the Zacks Computers - IT Services industry, the Zacks Computer and Technology sector and the S&P 500 index.Image Source: Zacks Investment ResearchSharing the market space with BigBear.ai, other renowned players like C3.ai, Inc. AI and Palantir Technologies Inc. PLTR are gaining from the robust market trends for AI-powered solutions. In the past three months, shares of C3.ai and Palantir Technologies have gained 11.8% and 55.9%, respectively.BBAI’s Valuation TrendBBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 11.16X, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors. That said, in the long term, the valuation could move toward a premium, given the favorable market fundamentals backing the company’s revenue visibility.Image Source: Zacks Investment ResearchNotably, C3.ai and Palantir Technologies are currently trading at a forward 12-month P/S ratio of 6.81X and 71.99X, respectively.Earnings Estimate Revision of BBAIBBAI’s bottom-line estimates indicate a loss per share for 2025 and 2026. The estimated values have widened in the past 60 days to a loss per share of 41 cents and 21 cents, respectively. Although the estimated figures for 2025 and 2026 imply year-over-year growth, the downward revision indicates bearish analyst sentiments.EPS TrendImage Source: Zacks Investment ResearchBBAI stock currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report C3.ai, Inc. (AI): Free Stock Analysis Report Palantir Technologies Inc. (PLTR): Free Stock Analysis Report BigBear.ai Holdings, Inc. (BBAI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks