Could This Under-the-Radar Artificial Intelligence (AI) Defense Company Be the Next Palantir?

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smaller AI defense company that some investors are hoping could witness Palantir-style share price increases.10 stocks we like better than BigBear.ai ›Palantir Technologies was the top-performing stock in the S&P 500 and Nasdaq-100 during the first half of 2025. With shares soaring by 80% through the first six months of the year -- and by 427% over the last 12 months -- Palantir has helped drive a lot of attention to the intersection of artificial intelligence (AI) and defense contracting.Palantir is far from the only company seeking to disrupt defense tech. A little-known competitor to the company is BigBear.ai (NYSE: BBAI), whose shares are up by an impressive 357% over the last year.Could BigBear.ai emerge as the next Palantir? Read on to find out.BigBear.ai's share price volatility so far this year mimics the movements of a rollercoaster. Initially, shares rose considerably shortly following President Donald Trump's inauguration and the subsequent announcement of Project Stargate -- an infrastructure initiative that aims to invest $500 billion into AI projects through 2029.BBAI data by YChartsHowever, these early gains retreated following the Pentagon's plans to reduce its budget by 8% annually.While reduced spending from the Department of Defense (DOD) was initially seen as a major blow to contractors such as Palantir and BigBear.ai, the trends illustrated above suggest that shares rebounded sharply -- implying that the sell-offs back in February may have been overblown. Why is that?In my eyes, a major contributor to the recovery in defense stocks came after Defense Secretary Pete Hegseth announced his intentions to double down on a strategy dubbed the Software Acquisition Pathway (SWP).In reality, the DOD's budget cuts are focused on areas that are deemed non-essential or inefficient. For example, the Pentagon freed up billions in capital by reducing spend with consulting firms such as Booz Allen Hamilton, Accenture, and Deloitte. In addition, a contract revolving around an HR software system managed by Oracle was also cut.Under the SWP, it appears that the DOD is actually looking to free up capital in order to double down on more tech-focused initiatives and identify vendors that can actually handle the Pentagon's sophisticated workflows.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,340.75 +6.00 (+0.09%)Dow Futures44,578.00 +38.00 (+0.09%)Nasdaq Futures23,255.00 +30.75 (+0.13%)Russell 2000 Futures2,254.40 +3.40 (+0.15%)VIX16.41 -0.11 (-0.67%)Gold3,360.90 +2.60 (+0.08%)PortfolioSign in to access your portfolioSign inTop gainersSTEM Stem, Inc. 13.50 +4.23 (+45.63%)TLN Talen Energy Corporation 328.63 +64.63 (+24.48%)CRSP CRISPR Therapeutics AG 65.13 +10.04 (+18.22%)IVZ Invesco Ltd. 19.92 +2.64 (+15.28%)SOC Sable Offshore Corp. 31.69 +3.35 (+11.82%)Top losersMLGO MicroAlgo Inc. 14.66 -3.12 (-17.57%)ARWR Arrowhead Pharmaceuticals, Inc. 16.76 -2.09 (-11.09%)MOH Molina Healthcare, Inc. 182.98 -21.27 (-10.41%)ELV Elevance Health, Inc. 277.09 -25.36 (-8.38%)STNE StoneCo Ltd. 13.67 -1.24 (-8.32%)Most activeLCID Lucid Group, Inc. 3.0400 -0.0800 (-2.56%)QS QuantumScape Corporation 14.64 +1.04 (+7.65%)NVDA NVIDIA Corporation 172.41 -0.59 (-0.34%)WBD Warner Bros. 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