As artificial intelligence rapidly reshapes national security, BigBear.ai stands at the intersection of opportunity and challenge, leveraging its specialized expertise to carve out a niche in a sector increasingly dominated by industry titans like Palantir Technologies.
The defense AI market is experiencing unprecedented growth, fueled by geopolitical tensions and a surge in government spending on advanced analytics and autonomous systems. While Palantir continues to set the benchmark for scale, profitability, and integration across federal and commercial clients, BigBear.ai is positioning itself to benefit from the broader industry momentum.
BigBear.ai’s recent contract wins with the Department of Defense and the Department of Homeland Security underscore its ability to deliver mission-critical AI solutions. Notable among these is the advancement of its Virtual Anticipation Network (VANE) prototype, a tool designed to enhance geopolitical risk analysis for the Pentagon.
Such projects have helped BigBear.ai build a robust backlog—now valued at $385 million, up 30% year-over-year—reflecting deepening demand for AI-driven defense capabilities. The company’s portfolio, which includes threat detection, digital identity, and supply chain optimization tools, is being scaled across both federal and commercial domains.
Despite these strategic wins, BigBear.ai faces significant financial headwinds. Revenue growth has been modest, with 2024 sales of $158 million marking only a 2% increase from the prior year. Losses have deepened, reaching $296 million in 2024, a dramatic uptick from previous figures.
Quarterly momentum, including a 5% year-over-year revenue increase in the first quarter of 2025, is encouraging but insufficient to reverse the broader pattern of underperformance.
The company’s stock has been volatile, surging from under $1.50 in mid-2023 to over $10 in early 2025 before settling around $5, reflecting both market enthusiasm and concerns about execution and profitability.
The backdrop for BigBear.ai’s story is the outsized success of Palantir, which reported a 39% year-over-year revenue surge to $884 million in the first quarter of 2025. Palantir’s government segment revenue jumped 45%, driven by landmark contracts with NATO and the Pentagon.
Its Gotham and Foundry platforms have become the gold standard for data integration and AI-driven decision-making in defense and intelligence. Palantir’s profitability, diversified revenue streams, and deep integration into national security workflows present a high bar for smaller competitors.
BigBear.ai’s partnership with Palantir, integrating its predictive analytics and optimization tools with Palantir’s Foundry platform, is a strategic move to extend its reach and credibility. This collaboration allows BigBear.ai to tap into Palantir’s expansive customer base and leverage its robust infrastructure, potentially accelerating adoption of BigBear.ai’s solutions.
While the company remains a high-risk, high-reward investment, its ability to ride the defense AI wave hinges on converting contract wins into sustainable revenue and narrowing persistent losses.
In summary, BigBear.ai is well-positioned to benefit from the explosive growth in defense AI, even as Palantir dominates the sector. Investors should weigh the company’s strong backlog and strategic partnerships against ongoing financial challenges and intense competition.
For those seeking exposure to the defense AI theme, BigBear.ai offers a compelling, albeit speculative, opportunity as the industry continues to evolve.
