Will BigBear.ai Reach $10 in 2026?

Core Viewpoint - BigBear.ai (NYSE: BBAI) is a notable AI stock with potential for significant growth, currently trading between $6 and $7, with aspirations to reach $10 by 2026, but investors should be aware of its unique business model and challenges [1]. Group 1: Business Model and Contracts - BigBear.ai focuses on providing AI solutions primarily to government and government-adjacent entities, with its largest contract being valued at $165 million for the U.S. Army to develop the Global Force Information Management-Objective Environment (GFIM-OE) system [3]. - Unlike Palantir Technologies, which offers a modular software platform for government use, BigBear.ai develops custom solutions that may not be applicable elsewhere, positioning it closer to a consulting business rather than a software platform provider [4]. Group 2: Market Challenges - BigBear.ai has deployed its software in airport security across various international airports, but the limited market for this application necessitates the development of additional software solutions for business growth [5]. - The company's business model, resembling a consulting approach, negatively impacts its margin profile compared to traditional software companies [5]. Group 3: Financial Performance - BigBear.ai is currently not profitable, and its gross profit margins range between 20% and 30%, significantly lower than the 70% to 90% margins typically seen in software peers like Palantir [6][8]. - The lower gross margins raise concerns about the company's financial health and future growth potential, as assumptions made for typical software companies may not apply to BigBear.ai [8].