Artificial intelligence spending has been rising rapidly, with a new joint venture called Stargate announcing a significant investment of hundreds of billions of dollars to build data centers and infrastructure needed for AI development. This news may have sparked excitement among investors, particularly in smaller companies like BigBear.ai.
BigBear’s decision intelligence solutions can help businesses make complex decisions related to AI, but there is no direct link between the company and Stargate. However, the increased focus on AI could indirectly benefit BigBear by highlighting its importance and attracting more attention from potential customers.
Despite this potential benefit, investors should be cautious about BigBear’s stock performance. The company has been growing rapidly, with revenue increasing by over 22% in its latest quarter, but it also incurs significant losses. In fact, the company’s net loss totaled $12.2 million last quarter, and its gross margins are relatively low.
The recent news of Chinese company DeepSeek releasing a cheap and competitive AI model has raised concerns about the necessity of heavy spending on AI. This could lead to businesses reassessing their investment in AI-related projects, including those offered by BigBear. Furthermore, the company’s financials remain a concern, with weak competition in the market and limited marketing budget.
Given these uncertainties, it is best to approach BigBear.ai stock with caution. While the Stargate venture may bring some indirect benefits, they are unlikely to be immediate or substantial. Investors should consider taking on high levels of risk if they still want to invest in BigBear, but a more conservative approach may be advisable.
Source: https://www.fool.com/investing/2025/02/02/could-the-stargate-project-help-send-bigbearai-sto