Is BigBear.ai Stock the Next Palantir and a Buy?

Core Insights - The generative AI software market has significantly boosted BigBear.ai Holdings, Inc.'s shares, which have increased by 281% over the past year, but recent volatility raises questions about its future potential compared to Palantir Technologies Inc. [1] Financial Performance - BigBear.ai's shares have declined by 6.1% since the beginning of last month due to disappointing second-quarter results, with revenues falling to $32.5 million, an 18% decrease from $39.8 million in the same quarter last year [2][9] - Revenue growth has slowed year over year for the past four quarters, with the most significant decline occurring in the latest quarter, attributed to reduced volumes in certain Army programs [3] - The management has revised its full-year 2025 revenue forecast to between $125 million and $140 million, down from the previous estimate of $160 million to $180 million, due to postponed contracts from the U.S. government [4][9] Backlog and Contracts - BigBear.ai reported a substantial backlog of $380 million as of June 30, 2025, but only about 4% of this backlog is funded, which limits its near-term revenue impact [6][9] - The majority of contracts in the backlog are from the federal government, which may lead to prolonged approval procedures [6] Comparison with Competitors - In contrast to BigBear.ai, Palantir Technologies has shown strong performance, with U.S. business revenues growing by 68% year over year in the second quarter, and U.S. government revenues rising by 53% [7][10] - Palantir secured 157 deals worth at least $1 million in the reported quarter, indicating strong demand for its AI solutions [8] Investment Considerations - BigBear.ai's reliance on government contracts is hindering its revenue growth, and its backlog does not guarantee future expansion, making it a riskier investment [11] - Despite trading at a lower forward price-to-sales ratio of 15.44 compared to Palantir's 96.52, BigBear.ai has struggled to build a customer base at a commendable pace [11] - The recent launch of Enhanced Passenger Processing at Nashville International Airport and the overall increase in AI software spending may provide some positive momentum for BigBear.ai [12]