With the arrival of artificial intelligence (AI), NVIDIA Corporation NVDA experienced rapid business growth. Its shares have soared 85.8% in the past year. However, BigBear.ai Holdings, Inc. BBAI recently became a Wall Street darling, with its shares surging a whopping 332.5% over the past year. 

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BigBear.ai stock has more than doubled this year, now trading over $9 from $4 at the beginning of the year. Does this mean the company that offers AI-powered decision-intelligence solutions is a promising investment in the AI industry? Let’s find out –

3 Reasons to be Bullish on BBAI Stock

BigBear.ai recently secured a contract with the Department of Defense for its Virtual Anticipation Network (“VANE”), leading to a rally in its shares. VANE will utilize machine learning and AI to predict and proactively address adversarial actions in complex settings, according to BigBear.ai. 

The government contract opens up more business opportunities for BigBear.ai in the long run. With the government poised to spend more on defense, BigBear.ai has immense growth potential.  BigBear.ai was also awarded a Navy contract last month, opening doors for growth in other federal agencies.

The change in CEO, in the meantime, has been a boon for BigBear.ai. Mandy Long has been replaced by Kevin McAleenan, who has increased access to the Trump administration and extensive experience with government agencies, helping BigBear.ai secure more government contracts.

An outcome from a recent summit in Paris, meanwhile, provided BigBear.ai with a bullish momentum. Proceedings from the event showed that European leaders are inclined toward relaxing AI regulatory standards, benefiting BigBear.ai’s EU presence.

Should I Invest in BBAI Stock Now? Could it be the next NVIDIA?

BigBear.ai winning new contracts vis-à-vis share price gains may tempt retail investors to buy the stock. However, BigBear.ai’s financials don’t justify such rapid growth in its stock price. 

BigBear.ai’s revenues for the first nine months of 2024 were unchanged from the same period a year ago, while the company had to bear operating losses in the past three quarters and bore a hefty goodwill impairment charge. The business is far from breaking even, making the BBAI stock susceptible to corrections soon.

BigBear.ai, anyhow, has a bad reputation for going through a boom-and-bust cycle. For instance, in 2023, a broader AI boom led by the success of ChatGPT helped the BBAI stock rally. However, the company couldn’t sustain its revenue growth, and the BBAI stock fell in 2024. Rapid growth also leads to profit bookings, which adds to price declines.

Hence, investors should adopt a wait-and-watch approach for better clarity about its prospects since BigBear.ai’s growth has, time and again, been inconsistent, and the stock is subjected to immense volatility. The BigBear.ai stock is currently more volatile than the markets it trades in. It has a beta of 3.17.

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Therefore, it’s too early to predict BigBear.ai as the next NVIDIA, given NVIDIA’s solid financials, chip demand, and market dominance, which contribute to long-term growth for the semiconductor giant (read more: NVIDIA or Palantir: Which is the Better AI Stock to Buy Now?).

NVIDIA has a Zacks Rank #2 (Buy), whereas BigBear.ai has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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