The technology sector has been in the spotlight post-election, with artificial intelligence (AI) and crypto stocks among the market's top gainers amid expectations for more favorable policies from the incoming administration. One lesser-known company that gained attention from investors this week is BigBear.ai (BBAI), a penny stock in the AI space with a market capitalization of around $716 million. Earlier this week, BBAI stock surged by 28.6% in a single trading session after a positive mention in The Economic Times.

The write-up drew comparisons between BBAI and the much larger Palantir Technologies (PLTR), which has seen its stock soar by 345% year-to-date. The article speculates whether BigBear.ai could follow a similar trajectory as Palantir, given its focus on AI and machine learning solutions for complex data analysis.

Notably, BigBear.ai and Palantir are partners, which makes this a question worth considering for investors seeking the next AI stock multi-bagger. Even though BigBear.ai is not yet profitable, some recent developments make it an exciting player in the AI analytics field. Let’s take a closer look at what BigBear.ai is doing and see how it might grow in the analytics space.

The Numbers Behind BBAI's Potential

BigBear.ai (BBAI) is gaining recognition in artificial intelligence by providing intelligent solutions in areas such as machine learning, data analysis, and cybersecurity. The company is dedicated to using technology to assist organizations, particularly in the defense sector, in making better decisions.

Looking at BBAI's stock over the past year, it seems to have the potential to follow in the footsteps of Palantir. BBAI is up 100% over the past 52 weeks, and 57.7% on a year-to-date basis. 

The stock is also quite volatile, with a beta of 3.58, but recent contracts and revenue growth suggest that BBAI might be on the verge of an inflection point - particularly if it can keep landing government contracts, and also branch out into commercial markets, similar to Palantir's trajectory.

Speaking of growth, BBAI’s latest earnings report showed a revenue rise of 22.1%, reaching $41.5 million, compared to $34 million last year. Its gross margin also improved to 25.9%, up from 24.7%. Revenue fell short of estimates, with management noting a “cautious” approach among governments toward AI.

The company did report a net loss of $12.2 million, but managed to achieve positive adjusted EBITDA of $0.9 million. With a cash balance of $65.6 million as of Sept. 30, BBAI is in a good position to support its growth plans despite these losses. While there are definitely risks with investing in this growth-stage penny stock, BBAI could be an interesting investment opportunity, even as it navigates the usual challenges faced by emerging tech companies.

The Engines Fueling BigBear.ai's Ascent

BigBear.ai is making great strides thanks to key partnerships and important contracts. In October, the company landed a five-year contract worth $165.15 million from the U.S. Army for Global Force Information Management services. This deal has BigBear.ai helping the Army update its old systems and move toward a more modern, data-driven approach. CEO Mandy Long pointed out that this partnership not only shows off their technical skills, but also positions BigBear.ai as an important player in improving military decision-making with advanced technology.

Later that same month, BBAI rolled out its biometric verification platform at Denver International Airport, which sparked a big surge in the shares.

And of course, BigBear.ai's partnership with Palantir Technologies adds even more potential. The two companies are working together to combine their strengths and create powerful AI solutions for complicated data situations. This collaboration lets BigBear.ai tap into Palantir's strong reputation and market presence, which could help it grow even faster.

What Do Analysts Predict for BBAI?

Looking ahead, BigBear.ai is sticking to its revenue guidance for the year, aiming for $165 million to $180 million. The company ended the quarter with a backlog of roughly $437 million, though management cautioned that it expects “lumpy” results as governments continue to proceed carefully with AI budgets.

Analysts are feeling positive about BBAI's future. Four analysts in coverage have a consensus rating of "strong buy." Among these analysts, three suggest a “strong buy,” while one has a “hold” rating.

The average price target for BBAI is set at $3.00, which is a discount to current prices. The Street-high target of $3.50 is only 2.9% overhead.

Conclusion

In summary, BigBear.ai is carving out a promising path in the AI landscape, bolstered by key contract wins and strategic partnerships that enhance its growth potential. Despite a conservative outlook, BBAI has the makings of a serious contender in the tech space over the long term, for investors who have the patience and risk tolerance to ride out the company's growth phase. As it continues to execute on its vision, investors may find themselves looking at a future where BigBear.ai stands alongside emerging AI giants like Palantir, making it an exciting opportunity worth watching.