We recently published a list of Complete List of All AI Companies Under $2 Billion Market Cap. In this article, we are going to take a look at where BigBear.ai Holdings, Inc. (NYSE:BBAI) stands against other AI companies under $2 billion market cap.
It’s clear that AI holds immense promise but it comes with significant risks. Some of the concerns that the market has include overreliance on a few key players, shifts in demand toward smaller competitors, and the broader impact of AI-driven market trends on earnings and valuations. While AI offers opportunities, managing risks such as customer concentration, economic headwinds, and market volatility will be crucial for its sustainable growth and integration.
Navigating AI Expectations and Market Dynamics
On CNBC ‘Fast Money,’ a discussion between traders highlighted concerns about elevated expectations for AI, especially in the chip market, with NVDA as a prime example. Past patterns in the semiconductor giant’s stock suggest potential declines, with customer concentration being a significant risk. Some believe demand for high-end chips could shift to smaller semiconductor companies. They also discussed that broader market performance might improve as other sectors gain traction, especially during earnings season, which is expected to influence investor sentiment more than AI and GLP-1 trends.
They mentioned that the key risks for earnings include the strong U.S. dollar, rising rates, and policy uncertainties, which may impact large-cap companies. While recent PPI data offered some relief, the bond market remains firm, with 10-year yields approaching 5%. Expectations for CPI and PCE figures are mixed, with potential reacceleration seen as a headwind for markets in a higher rate environment. Earnings and economic data were considered critical factors to watch by the traders.
Our Methodology
For this article, we scoured our database as well as several ETFs and media reports to find all possible AI stocks under $2 billion. We then listed the stocks in ascending order of their market cap. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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BigBear.ai Holdings, Inc. (NYSE:BBAI)
Market Capitalization: $952.23 Million
Number of Hedge Fund Holders: 7
BigBear.ai Holdings, Inc. (NYSE:BBAI) provides AI-driven decision intelligence solutions for national security, supply chain management, and digital identity. Its offerings include software and services that improve decision-making in complex, mission-critical environments. The company acquired Pangiam in 2024, expanding its vision AI capabilities in biometrics and anomaly detection.
BigBear.ai’s (NYSE:BBAI) solutions address national security, supply chain management, and digital identity markets, incorporating tools like predictive analytics, digital twins, and facial recognition technology. The company supports public and private sector clients, including defense and intelligence agencies, focusing on operational readiness, data integration, and digital security. According to the company’s last 10-K filings posted in March 2024, the total addressable market for the company’s products/offerings is projected to grow from $80 billion in 2024 to $272 billion by 2028.
As reported by TipRanks on December 30, 2024, Scott Buck from H.C. Wainwright maintained a Buy rating on BigBear.ai (NYSE:BBAI) with a $7.00 price target, attributing the company’s strong growth prospects and financial stability to several factors. BigBear.ai’s market outperformance, driven by rising demand for its AI services and involvement in key contracts like OASIS+, contributed to Buck’s positive outlook. The company’s successful extension of convertible notes has alleviated near-term concerns, positioning it well in a favorable environment for small-cap growth companies. Despite a revenue miss in Q3 2024, BigBear.ai has upheld its revenue guidance, prompting Buck to boost the price target, reflecting confidence in its growth trajectory.
Overall, BBAI ranks 11th on our list of the 59 AI companies under $2 billion market cap. While we acknowledge the potential of BBAI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BBAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
