Concerns About AI Industry Bubble and BigBear.ai’s Performance

There’s a growing worry among investors and analysts that the artificial intelligence (AI) sector might be inflating like a bubble. Major tech companies such as Alphabet, Microsoft, and Meta Platforms are pouring hundreds of billions of dollars into building the necessary data centers and infrastructure for their AI systems. These companies have the financial clout to take risks on AI investments, which is reassuring, even though the returns might not be immediate or guaranteed.

But to really understand whether there’s an AI bubble, it’s essential to look beyond the giants and consider smaller and medium-sized businesses that focus solely on AI services. BigBear.ai, for instance, is making waves by offering AI solutions to help governmental and corporate entities make real-time decisions based on data analytics. Recently, it has captured more investor interest.

In 2026, BigBear.ai’s stock has experienced a boost of 9.8%, and it’s up 33.6% over the last year. In comparison, the S&P 500 index has seen a rise of 13.6% over the past 12 months and just 1% year-to-date. However, BigBear.ai’s stock has faced significant turbulence historically; it’s down around 38% from its initial public offering price following a reverse merger in December 2021. That being said, the company still confronts substantial risks, which could result in further declines in stock value.

Will BigBear.ai continue to grow in 2026, or could its current trends signal trouble ahead? Many tech startups take quite a while to achieve profitability, but BigBear.ai has been reporting losses since going public. While they haven’t finalized their 2025 numbers yet, expectations suggest they might still be in the red.

In November 2025, BigBear.ai disclosed a net income of $2.5 million for the third quarter, but this was primarily due to an accounting adjustment regarding their valuation methods for derivative liabilities. Without that adjustment, the company would have posted losses for four consecutive quarters.

Investors in growth-focused tech stocks usually show patience, especially if a company’s earnings are on the rise. Unfortunately, BigBear.ai seems to be having a tough time in that regard as well.

Revenues tumbled from $43.8 million in Q4 2024 to $34.8 million in Q1 2025, and then down again to $32.5 million in Q2. Although there was a slight uptick to $33.1 million in Q3, caution remains warranted.

Looking ahead, BigBear.ai is asking its shareholders to vote on increasing the number of common shares from 500 million to 1 billion ahead of a special general meeting on February 18th. The company claims that this is necessary for future fundraising efforts aimed at supporting technology advancements, R&D, and strategic initiatives. While management indicates there are no immediate plans to release new shares, any such action tends to dilute existing shares’ value.

Is BigBear.ai on the verge of going under? Probably not. As of September 30, 2025, they held $456.6 million in cash and equivalents. Although it may continue to report losses for a while as they strive for revenue growth, some signs of progress do exist. In January, BigBear.ai announced the acquisition of technology assets from CargoSeer and formed partnerships with Kraft Group and the New England Patriots.

Nonetheless, until BigBear.ai successfully achieves sustainable revenue and profitability, the risks associated with its stock seem to overshadow any potential advantages. Personally, I wouldn’t consider this stock a worthwhile buy.

Before making a decision regarding BigBear.ai’s stock, keep in mind the overall marketplace dynamics and the performance of more established stocks if you’re seeking options with more definite potential.