BigBear.ai BBAI is showing early signs of improving its revenue mix as higher-margin artificial intelligence products become a larger contributor to growth. Second-quarter 2026 revenues increased 13% year over year to $36.7 million, primarily driven by Ask Sage’s generative AI platforms and products. More importantly, gross margin expanded sharply to 32.8% from 25% a year earlier, reflecting greater volume from these higher-margin GenAI offerings.
This shift could make BigBear.ai less dependent on traditional project-based work and increase the importance of scalable AI platforms and products. Ask Sage is gaining traction in secure government environments, including a second-quarter win with Naval Air Systems Command, while the company has expanded the platform into connected and air-gapped environments. CargoSeer also secured a five-year commercial deployment in El Salvador following a successful pilot, highlighting opportunities to expand AI-driven trade and border-security solutions internationally. Demand visibility is also improving. BigBear.ai won more than 20 contracts during the quarter, while backlog increased 9% from 2025-end to $269.6 million.
Still, the transition has not yet translated into stronger bottom-line performance. Adjusted EBITDA loss widened to $11.6 million from $8.5 million as spending on sales, marketing and growth increased. Therefore, the improving GenAI mix and margin expansion are encouraging, but sustained product growth and better operating leverage will be key to proving that BigBear.ai’s revenue quality is structurally improving.
How BigBear.ai’s Revenue Mix Compares With AI Peers
BigBear.ai’s push toward higher-margin AI platforms puts it in closer competition with Palantir Technologies PLTR and C3.ai AI, both of which generate a larger share of revenue from software-led offerings. Palantir’s model remains more mature, with second-quarter 2026 gross margin of 85% and strong growth across government and commercial customers. Palantir also benefits from expanding platform adoption within existing accounts, highlighting the scalability BigBear.ai is pursuing through Ask Sage and other products.
C3.ai offers another useful comparison because subscription revenues represented 94% of its fiscal first-quarter 2027 revenues. C3.ai’s subscription-heavy mix provides greater recurring-revenue exposure, although profitability remains under pressure. For BigBear.ai, a growing contribution from GenAI products could gradually improve revenue quality. However, Palantir’s stronger margins and C3.ai’s subscription concentration show that BigBear.ai still has room to shift further toward scalable, higher-margin offerings.
BBAI’s Price Performance, Valuation & EPS Estimate Trend
Shares of BBAI have plunged 23.9% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.
BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research
BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 8.56, as evidenced by the chart below.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 60 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.
EPS Trend of BBAI
Image Source: Zacks Investment Research
BBAI’s Zacks Rank
BigBear.ai currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).