BigBear.ai Holdings (BBAI) stock has declined 14% over the past five days, mainly due to the post-earnings selloff in the stock. The defense-focused artificial intelligence (AI) company disappointed investors with dismal second-quarter results. Despite the recent pullback, BBAI stock is still up 38% year-to-date. Wall Street is divided on this AI stock. While BBAI bulls remain optimistic about the company’s growth prospects amid the ongoing AI boom, some analysts argue that the stock’s steep valuation is not backed by strong fundamentals. Currently, the Street’s average price target indicates a downside risk in BBAI stock from current levels.
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BigBear.ai offers AI-powered decision intelligence solutions for national security, defense, travel and trade, and supply chains.
Analysts Have Mixed Views on BBAI Stock
BigBear.ai reported an 18% year-over-year decline in its Q2 revenue to $32.5 million, blaming disruptions in federal contracts, mainly in programs that support the U.S. Army, as they seek to modernize their data architecture. The company also lowered its full-year revenue guidance and pulled back its adjusted EBITDA outlook. BBAI’s performance was in contrast to another defense AI stock, Palantir Technologies (PLTR), which delivered upbeat Q2 results, with revenue reaching the $1 billion mark for the first time. This made investors question BBAI stock’s elevated valuation following a strong year-to-date rally.
However, BBAI bulls are looking beyond the ongoing challenges, reinforcing their optimism about the company’s long-term prospects. For instance, Cantor Fitzgerald analyst Jonathan Ruykhaver reaffirmed a Buy rating on BigBear.ai stock and increased his price target to $6 from $5 to reflect secular tailwinds and “improved financial flexibility,” despite near-term execution issues. While Ruykhaver acknowledged that BBAI’s Q2 performance was “underwhelming,” he contended that the quarter demonstrated robust progress on major initiatives, including core product development and balance sheet improvements. Ruykhaver also highlighted the 42.9% year-over-year growth in BigBear.ai’s backlog to $380 million at the end of Q2 2025.
But not all analysts share Ruykhaver’s optimism, given the declining revenue, contracting margins, and profitability concerns. In reaction to the Q2 print, Northland Securities analyst Michael Latimore reaffirmed a Hold rating on BBAI stock with a price target of $3.50, indicating a downside risk of 43% from current levels.
Is BBAI a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on BBAI stock based on two Buys and two Hold recommendations. The average BBAI stock price target of $5.75 indicates a possible downside of 6.4% from current levels.
