This micro-cap AI stock is being increasingly touted as the next Palantir Technologies Inc. (NASDAQ:PLTR), but some analysts disagree with this framing.

What Happened: On Monday, BigBear.ai Holdings (NYSE:BBAI), which focuses on artificial intelligence and analytics primarily for defense and government contracts, was hit with a class-action lawsuit by investors, aimed at recovering losses arising due to alleged securities fraud between March 31, 2022, and March 25, 2025.

The complaint alleges that deficient accounting practices, alongside the improper accounting of convertible notes, led to losses for investors, which it seeks to recover.

This comes during a volatile couple of months for the stock, starting with a 146% rally from January through February, followed by a 62% pullback, amid growing financial turbulence and legal scrutiny.

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Analysts remain cautiously optimistic on the stock, with an average consensus price target of $4.63 per share, representing an upside of 18.71% from current prices. William Blair analyst, Louie DiPalma, has reiterated a “Neutral” stance on the stock, citing funding and guidance-related issues, reported TipRanks.

Cantor Fitzgerald analyst Jonathan Ruykhaver reduced his price target from $8 to $6 but retained an “Overweight” rating. Ruykhaver believes recent contracts with the Navy and the Department of Defense's Chief Digital and Artificial Intelligence Office (CDAO) could provide meaningful growth opportunities if federal budgets stabilize.

According to research by The Motley Fool, the company is expected to underperform for the next five years, primarily due to 40% of revenue being tied to the Federal Government, making it vulnerable to budget cuts and policy changes.

Why It Matters: During its first quarter results last month, the company reported $34.76 million in revenue, missing estimates at $36.26 million, followed by a loss of $0.26 per share, significantly higher than consensus estimates at $0.06 per share.

The stock has a relative strength index (RSI) of 52.96, which puts it in the Neutral category, meaning that it’s neither overbought nor oversold.

Price Action: Shares of BigBear.AI were up 1.30% on Monday, trading at $3.90, and are up 0.51% after hours, according to data from Benzinga Pro.

According to Benzinga’s Edge Stock Rankings, the stock scores well on Momentum, has a favorable price trend in the short and long terms, but not in the medium term. Click here for deeper insights into the stock.

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