We came across a bullish thesis on BigBear.ai Holdings, Inc. (BBAI) on wallstreetbets Subreddit Page by Available_Chapter685. In this article, we will summarize the bulls’ thesis on BBAI. BigBear.ai Holdings, Inc. (BBAI)’s share was trading at $2.20 as of Dec 2nd.
BigBear.ai is an emerging AI-powered analytics and decision-making platform with significant potential, particularly in government contracting and defense. Despite its small market capitalization of around $550 million, the company is poised for explosive growth, especially given its strong positioning within the U.S. Department of Defense (DoD) and intelligence agencies. BigBear.ai’s software enables organizations to predict, visualize, and act on complex data, providing a critical edge in areas such as defense, healthcare, and warehousing. The company’s potential has largely gone unnoticed, partly due to its SPAC-originated public listing, which initially led to a significant share price drop, and its low institutional ownership of less than 10%. However, recent developments suggest that this is about to change. In October, BigBear secured a five-year, $165 million contract with the U.S. Army, highlighting its growing relationship with government agencies. Additionally, the company reported a 22.1% revenue increase in Q3 2024, reaching $41.5 million, while improving its gross margin to 25.9%, despite a net loss of $12.2 million. The company’s current market valuation is incredibly low, trading at just over 3x forward revenue compared to AI giants like Palantir (PLTR), which trades at 45x forward revenue, indicating significant upside potential. BigBear.ai is also diversifying its revenue streams, with notable contracts in healthcare and warehousing, including work with Amazon, and a $437 million backlog as of its latest earnings call. Furthermore, the acquisition of Pangiam, a leader in facial recognition technology, positions BigBear to benefit from increased government spending on domestic security, a trend that is likely to continue under a defense-focused administration. With institutional ownership rising and analysts rating it a Strong Buy, BigBear.ai is positioned for rapid growth, especially as AI and defense spending continue to boom. The company’s steady upward momentum in its share price suggests that this overlooked stock is primed for a breakout, offering a compelling risk/reward opportunity for investors.
BigBear.ai Holdings, Inc. (BBAI) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held BBAI at the end of the third quarter which was 9 in the previous quarter. While we acknowledge the risk and potential of BBAI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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 was originally published at Insider Monkey.