Artificial intelligence is increasingly transforming the defense sector, with both innovative startups and established firms vying for a pivotal role in federal agencies. At opposite ends of this spectrum are BigBear.ai Holdings, Inc. and Leidos Holdings, Inc.. BigBear.ai is an AI-focused company undergoing significant strategic change, while Leidos, a multibillion-dollar defense conglomerate, is integrating AI into its extensive portfolio. Both firms share missions in national security, analytics, and digital modernization, benefiting from sustained federal technology investments, making their comparison particularly relevant as each has recently released earnings updates amid a rapid acceleration in AI adoption by government agencies.
Despite their exposure to similar government spending trends, the monetization strategies for AI differ markedly between the two companies. BigBear.ai aims to establish itself as a core provider of secure generative AI systems tailored for government needs, whereas Leidos is increasingly using AI to enhance its existing offerings across sectors like defense, healthcare, aviation, and infrastructure.
Evaluating each company’s fundamentals, strategic positioning, and earnings trajectories is crucial for investors considering which stock may provide better near-term opportunities. BigBear.ai is in the midst of a transformative shift from consulting to a scalable AI platform model. A pivotal part of this transition is its planned acquisition of Ask Sage, a secure generative AI platform designed for government applications. Ask Sage already boasts over 100,000 users across 16,000 government teams, supporting various models used by the U.S. Space Force, Army, and Defense Health Agency. This acquisition could elevate BigBear’s standing as a key technology player in defense infrastructure, with projections suggesting approximately $25 million in annual recurring revenue by 2025—an increase that reflects the surging demand for secure AI solutions in mission-critical applications.
In addition to the acquisition, BigBear.ai is expanding its operational footprint through the deployment of its VeriScan biometric technology at major airports, including Chicago O’Hare and Seattle-Tacoma, and boosting the adoption of logistics analytics platforms both domestically and internationally. The company reported a record cash and investment position of $456.6 million at the end of its third quarter of 2025, providing it with substantial liquidity for aggressive strategic initiatives. Despite these advancements, the firm faces challenges, including a 20% year-over-year revenue decline attributed to reduced Army program volumes and disruptions from the government shutdown, which temporarily halted some intelligence-related activities. Furthermore, an adjusted EBITDA loss of $9.4 million and a decrease in gross margin to 22.4% underscore the operational hurdles it must navigate as it integrates Ask Sage.
Despite these short-term difficulties, BigBear.ai’s trajectory remains promising, driven by a robust liquidity position, a rapidly growing user base for generative AI, and a backlog that reached $376 million last quarter, positioning the company to capitalize on increasing federal investment in AI technologies through 2026 and 2027.
On the other hand, Leidos stands as a highly diversified and strategically entrenched player in the U.S. defense contracting arena. Its third-quarter 2025 results demonstrated resilience, showing $4.47 billion in revenue—up 7% year over year—and an adjusted EBITDA of $616 million, yielding a margin of 13.8%. The company also raised its full-year earnings per share guidance, reflecting confidence in its operational momentum.
Recent contract wins illustrate Leidos’ extensive portfolio, including a multiyear $2.2 billion classified intelligence award and a $540 million AI-enabled counterterrorism software contract. A book-to-bill ratio of 1.3 and a sequential increase in funded backlog to $47.7 billion provide exceptional multi-year revenue visibility. Leidos is actively pursuing its NorthStar 2030 strategy, which emphasizes AI-driven mission software, digital modernization, energy infrastructure engineering, and autonomous maritime systems. However, performance has varied across its segments, with a decline in commercial and international revenue, and tightened margins in defense systems.
While BigBear.ai emphasizes AI-centric innovation, Leidos incorporates AI as a force multiplier within its well-established services and systems-engineering framework. This positions Leidos as a steady compounding entity with incremental upside from AI, contrasting with BigBear.ai’s higher volatility as a pure AI play.
Over the past year, BigBear.ai shares have surged by 180%, significantly outperforming the broader Zacks Computer and Technology sector, which rose by 28.7%, and the S&P 500, which advanced by 15.8%. This rally reflects investor enthusiasm for BigBear’s evolving platform, improved balance sheet, and the anticipated benefits from Ask Sage. In contrast, Leidos shares increased by 16.1%, slightly exceeding the S&P 500 while reflecting a more stable investment profile.
Currently, BigBear.ai trades at a forward price-to-sales multiple of 15.53, considerably higher than the technology sector median of 6.66 and Leidos’ multiple of 1.37. This premium reflects market expectations of high growth for BigBear.ai as it positions itself in secure AI deployments, while Leidos’ lower multiple aligns with its status as a mature contractor with reliable cash flows.
Analyst estimates reveal a marked improvement for BigBear.ai, with the Zacks Consensus Estimate for a 2025 loss per share narrowing from $1.10 to 93 cents. Revenue forecasts indicate a 16.1% decline in 2025 due to temporary disruptions, followed by a projected 30.2% growth in 2026. Conversely, Leidos maintains stable earnings momentum, with its 2025 earnings per share estimate increasing from $11.27 to $11.67, indicating a year-over-year growth of 14.3%.
Both companies present compelling investment narratives. Leidos offers durability, scale, and consistent profitability backed by a substantial backlog and a strong dividend profile. In contrast, BigBear.ai promises greater near-term upside potential as it transitions into a secure AI platform provider. Investors seeking stability may find Leidos a fitting choice, whereas those prioritizing growth in defense-grade AI may lean toward BigBear.ai as a promising option.
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