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BigBear Stock Keeps Soaring After Defense Deal. It Could Be the Next Palantir.

Nov 11, 2025 08:36:00 -0500 by Nate Wolf | #AI #Earnings Report

The AI software firm reported a smaller loss than expected. (DEPARTMENT OF DEFENSE / Getty Images)

Key Points

Defense and artificial intelligence are two great tastes that go great together, as Palantir stock has demonstrated. BigBear.ai Holdings is trying to play the same game, but its shares bring a lot more volatility and risk than Alex Karp’s larger, already volatile company.

Palantir Technologies has soared 143% in 2025, reaching a market capitalization of more than $450 billion. It is the largest holding in the Global X Defense Tech exchange-traded fund , which has climbed 78% this year through Tuesday’s close.

Now, investors who find even the much-hyped Palantir too staid—or perhaps overbought—may have a more volatile alternative to consider: BigBear.

The Virginia-based software company, which sells to the Defense Department and other branches of the federal government, offers solutions like facial recognition and biometrics systems, open-source intelligence tools, and automation platforms for military planning. Shares entered Monday afternoon’s earnings print up 28% this year and 214% over the last 12 months, buoyed by lucrative contracts and excitement around AI.

BigBear, which also has commercial clients, is doubling down on defense. On Monday, the company announced a $250 million deal to acquire Ask Sage, an AI platform built for defense and national security agencies that supports more than 100,000 users across hundreds of companies and 16,000 government teams.

Wall Street seems to like it. BigBear stock surged 6.1% Tuesday and was up another 13% at $6.86 on Wednesday.

“Despite delays resulting from the government shutdown, we believe the potential for new business in the field of border security and defense remains strong,” CEO Kevin McAleenan said. Those opportunities are likely “to materialize into contracts next year” with help from President Donald Trump’s sweeping tax-and-spending bill, he said.

Palantir’s scale in the defense technology space will be difficult for BigBear to compete with. Earlier this year, Palantir notched a 10-year contract worth up to $10 billion to provide software and data analytics to the Army. It has also won tens of millions of dollars worth of work from Immigration and Customs Enforcement as the agency has beefed up deportation efforts under President Donald Trump.

But BigBear can certainly pick off smaller, more specialized government contracts. Analysts at Cantor Fitzgerald pointed to the Customs and Border Protection’s investments in biometric entry-and-exit systems, for instance, which is one of BigBear’s areas of expertise. Security needs at the 2026 FIFA World Cup and 2028 Olympics in Los Angeles could also give BigBear a boost.

The Ask Sage acquisition, meanwhile, expands the market BigBear can address and “strengthens its position as a leading provider of AI, computer vision, and decision advantage solutions for national security,” said Cantor Fitzgerald analyst Jonathan Ruykhaver in a research note. The firm reiterated an Overweight rating for the stock and boosted its target for the price to $7 from $6.

But BigBear has yet to turn those tailwinds into profit, and that makes it a riskier bet for investors than its already risky cousin Palantir. BigBear’s losses haven’t consistently narrowed since it went public via a 2021 merger with a special-purpose acquisition company, or SPAC. And the company is on track to post its lowest fiscal-year revenue as a public company in 2025. It posted a loss of 3 cents a share on revenue of $33.1 million for the third quarter.

Created with Highcharts 9.0.1Same Destination, Different PathShares of Palantir and BigBear have had massive moves this year, but BigBear has been​a lot more volatile.Source: FactSet

Created with Highcharts 9.0.1BigBear.ai Holdings Inc.Palantir Technologies Inc.Dec. 2024'25-1000100200300400500%

The stock is also vulnerable to dramatic day-to-day swings. Palantir has a beta of 2.08 over the past 52 weeks, meaning it is roughly twice as volatile as the broader stock market. BigBear’s beta is even higher at 2.47.

Palantir’s largest single-day gain this year was 24%, and its steepest loss was 12%. BigBear’s records are a much wider 45% rise and 20% decline. Wednesday’s surge was the stock’s 33rd single-day swing of 10% or more in 2025 alone.

Investors should expect more bumpy quarters ahead, said H.C. Wainwright analyst Scott Buck, though individual programs should eventually have less impact on quarterly results as the business scales up.

Ask Sage may be part of that trajectory. The start-up, which was founded in 2023, is expected to post annual recurring revenue of roughly $25 million in 2025, up sixfold from a year ago. BigBear says the deal will close late in the fourth quarter of 2025 or early in the first quarter of 2026.

H.C. Wainwright also thinks the company is likely to look at additional acquisitions to accelerate its growth.

As for its core business, “we believe BigBear.ai remains well positioned to be a beneficiary from the current administration’s priorities,” Buck wrote, while reiterating his Buy rating and $8 price target on the stock.

Investors better hope that defense is the best offense for BigBear—otherwise this risky stock just got a whole lot riskier.

Write to Nate Wolf at nate.wolf@barrons.com