BigBear.ai stock rocketed 20% on Monday. Shares have gained 46% last week, grabbing investor attention amid renewed interest in AI-driven defense and data analytics firms.

BigBear.ai delivers various AI solutions that focus on national security and infrastructure. For example, it provides facial recognition software to many airports to screen passengers for security risks, and it's helping the U.S. Navy construct submarines with its AI-enhanced shipbuilding software.

BigBear.ai's business delivered $34.8 million in the first quarter, a 5% year-over-year increase. It also benefited from the exercise of 2024 warrants to the tune of $64.7 million in gross proceeds.

The company experienced leadership changes this year. Its CFO departed in June, and it gained a new CEO, Kevin McAleenan, in January. McAleenan served as Acting Secretary of the U.S. Department of Homeland Security during the first Trump administration, so his experience could prove beneficial to BigBear.ai's government business.

Risks to Consider

• Not Profitable: The company faces some challenges. BigBear.ai is not profitable. Its Q1 net loss totaled $62 million, as some of its operating expenses increased year over year.

• Substantial Debt: BigBear.ai also possesses substantial debt. Its Q1 total liabilities of $198.5 million included long-term debt of $100.6 million, and that was after the amount was reduced by $58 million through voluntary conversions of its 2029 convertible notes. Q1 assets totaled $396.3 million.

Positive Catalysts

In spite of its financial challenges, BigBear.ai has several notable positive factors:

• Growing Backlog: The company’s backlog increased 2.5 times from $168 million at the end of 2023 to $385 million by the end of March 2025. This significant rise offers essential revenue visibility, even amid execution difficulties.

• Key Government Contracts: BBAI has secured multiple major government contracts in 2025, including a 3.5-year, $13.2 million sole-source Department of Defense (DoD) contract to upgrade a vital force management system.

• Strategic Market Position: BigBear.ai operates in crucial AI applications related to national security, developing solutions such as facial recognition systems for airports and AI-augmented shipbuilding software for the U.S. Navy. The current elevated geopolitical climate strongly favors increased defense AI investments, generating a supportive market environment for the company.

Investment Outlook

In summary, BigBear.ai represents a high-risk, high-reward opportunity in defense AI spending. While the company benefits from robust backlog growth and operates in strategically significant sectors, its ongoing revenue stagnation, escalating losses, and extreme stock volatility make it unsuitable for risk-averse investors. The stock’s attractiveness largely depends on the continuation of geopolitical tensions that stimulate defense AI investment and, crucially, the firm’s ability to convert its contract awards into sustainable and substantial revenue growth.