Will BigBear.ai Soar in the Second Half of 2025?

This stock has been an absolute rollercoaster ride for investors, but those who have stayed patient have done well

Here's the big question: Will the rollercoaster ride continue its upward trend, or is a huge drop ahead

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Ai's revenue is tied to a few clients BigBear

Ai is one of the few pure-play AI companies available on the market

Often, the largest AI players have other offerings that make AI an ancillary play, but BigBear

Ai is not one of them

Ai offers several services, but most are specifically targeted toward U

However, it has also announced several key duct wins with the United Arab Emirates

Ai doesn't have a ton of clients

That's extreme concentration and could be a blem for BigBear

Ai if one of them decides to discontinue their contract

If this happens with other customers, it could spell disaster for the stock

Ai gains more clients and becomes more deeply integrated with its existing ones, this risk decreases

This isn't a show-stopper for the stock, but it's a risk that all investors should be aware of

Another factor with BigBear

Ai is that it's not growing at a rapid pace

This indicates that BigBear

Ai saw a large increase in contracts but hasn't recognized the revenue

This will vide some growth in the future, but investors will want to see both numbers moving nearly in tandem in the future

There's no way of knowing what's on the horizon with BigBear

Ai, so it's all a guessing game regarding whether a huge contract is coming its way

Should there be an announcement, don't be surprised if the stock experiences a significant movement ing the news

That's what investors are holding on to, because the rest of the appears somewhat suspect

Ai's gross margins are one thing to watch Compared to most software companies, BigBear

Ai's gross margins are poor

BBAI Gross fit Margin (Quarterly) data by YCharts

Ai's are a lot lower because it's more of a service-oriented AI company than a Software-as-a-Service (SaaS) model

This caps the maximum fit BigBear

Ai will one day be able to make (it's currently deeply unfitable)

As a result, when investors see that the stock is trading for under 12 times sales, they shouldn't assume that it's necessarily cheap

BBAI PS Ratio data by YCharts

PS Ratio = price-to-sales ratio

The reality is that BigBear

Ai's stock is currently very expensive, given its growth and gross margins

While there could be an announcement that drives the stock higher and justifies today's price tag, I will not be participating in finding out

Ai's stock is currently being driven by hype rather than actual results, and while the stock may continue to rise, it will be unpredictable

Additionally, it could crash if it reports poor quarterly earnings

There are far too many great AI stocks available at attractive prices to be messing around with BigBear

Ai's stock, and I'd rather be invested in ven winners than stocks driven by hype

Keithen Drury has no position in any of the stocks mentioned

The Motley Fool has no position in any of the stocks mentioned

The Motley Fool has a disclosure policy.