Artificial Intelligence (AI) represents one of the most transformative technological changes in modern history. BigBear.ai(NYSE: BBAI ) Leveraging this revolution in AI-powered analytics solutions, the stock has increased 136% in the past six months.
Recent government contract wins and strengthening financial performances have attracted significant investor interest in this emerging player. Let’s examine whether the stock is a buy at current levels or if investors should consider alternative strategies for this high exposure. AI inventory.
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On January 15, BigBear.ai appointed Kevin McLennan as CEO. McAllenan, who served as the company’s president, joins as CEO and brings extensive experience in both the government and private sectors, having previously served as acting secretary of the US Department of Homeland Security.
McAleenan’s background includes Pangiam, which BigBear acquired in 2024, and nearly two decades of government service, including his role as commissioner of U.S. Customs and Border Protection. His exceptional entrepreneurial success and deep understanding of national security priorities enable the company to expand its presence in the defense and security markets.
BigBear.ai recorded a strong revenue growth of 22.1% to reach $41.5 million in the third quarter of 2024. The company improved its gross margin to 25.9% compared to 24.7% last year.
The quarter still resulted in a net loss of $12.2 million, compared to net income of $4 million in Q3 2023, primarily due to changes in cash order pricing. Despite this, the company achieved positive adjusted earnings before interest, taxes, depreciation and amortization.EBITDA) maintained earnings of $0.9 million and backlog of $437 million, supporting future revenue projections.
BigBear.ai recently strengthened its position in the public sector with two significant contract wins. Consolidating its position in defense technology, the company has secured a five-year, $165 million sole-source prime contract with the US Army to provide advanced force management solutions powered by AI analytics.
In addition, BigBear.ai was awarded a subcontract through Concept Solutions under the Federal Aviation Administration’s (FAA) Information Technology Innovation Procurement Strategic Sourcing Program. This 10-year, multi-award, indefinite-delivery/indefinite-quantity contract with 14 companies has a collective cap of $2.4 billion and will allow the FAA to acquire a complete set of IT capabilities and solutions.
Despite the recent positive developments, the stock price at 5.3 times trailing sales should be considered cautiously, especially since the company’s peer group is trading at an average of 3.5 times trailing sales. Therefore, investors seeking exposure to BigBear.ai with limited risk can consider a cash-backed investment strategy as an alternative to buying stocks.
As an example, an investor using the January 17 options price on In January 2026, he could sell the option at a strike price of $3. That trade yields about $1.10 per share, or $110 per contract, before premiums.
This strategy offers a 37% return over the next 12 months if the stock stays above $3, but it’s important to remember that if the option is exercised you are obligated to buy 100 shares of the contract at $3 (ie the stock price falls below $3 at expiration). While this premium helps to offset any losses if the stock goes down, it limits any gain in exchange for this downside protection if the stock goes up significantly.
The combination of BigBear.ai’s experienced leadership, improving financial condition and expanding government contracts paints a promising picture. However, after the stock’s recent rally, a cash-backed investment strategy offers a calculated approach to this volatile AI player.
This strategy allows investors to collect high premiums while expressing their risk, a prudent move in a market that can quickly turn from a honeypot to a hornet’s nest. Although upside is hedged, the earnings combined with downside potential make the stock a strategic option to buy.
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