AI stocks are red-hot today. Last night Alphabet (Nasdaq: GOOGL) reported earnings and its stock is down 8% today. That headline might lead you to believe it’s a tough day for technology stocks, but Alphabet announced something in their earnings that is driving AI stocks up across the board. 

Specifically, the company plans to spend $75 billion in capital expenditures this year. With the vast majority of that spend going to AI data centers, stocks in the broad space are seeing strong gains today. Let’s look at a few companies on the move today. 

BigBear.AI Wins a Major Contract 

Earlier this morning, BigBear.ai (NYSE: BBAI) announced a government contract that sent its shares soaring. You can read a press release on the project win on BigBear’s investor relations site. Here’s a sample of the release detailing 

“BigBear.ai (NYSE: BBAI), a leading provider of AI-powered decision intelligence solutions for defense and national security, has been awarded a contract by the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office (CDAO) to advance BigBear.ai’s Virtual Anticipation Network (VANE) prototype. This initiative will support the CDAO and Office of the Secretary of Defense (OSD) by leveraging custom AI models to better assess news media originating in countries that are potential foreign adversaries.”

BigBear has struggled to grow in recent years, revenue was $145 million in 2021, $155 million in 2022, $155 million in 2023, and estimates for 2024 are currently at $168 million in revenue. 

Investors are clearly betting a contract in this space could drive growth. It probably helps that Palantir (Nasdaq: PLTR) just jumped 24% earlier this week after earnings and a big catalyst behind their growth has been the Department of Defense modernizing intelligence software. 

I’ve personally steered clear of many high-flying software stocks that added ‘AI’ to their name. While BigBear winning this contract is obviously a positive, keep in mind there are no revenue figures attached. Last year BigBear reported fourth-quarter earnings on March 7th. When they report their fourth-quarter earnings this year, they’ll likely provide updated guidance for 2025. So that would be a first ‘clue’ how much incremental revenue this contract provides. 

Yet, BigBear is now very expensive. Keep in mind the company projected revenue this year between $195 million and $215 million but will fall far short of that target. Despite that disappointment, shares are up 330% in the past year. BigBear is riding the excitement of investors searching out small names that could see big upside from AI, but to date its business results don’t match up with its stock performance. 

As of 2 p.m. ET, BigBear shares are up 39% on the day. 

Tempus AI and SoundHound Rise on General AI Enthusiasm 

Two other stocks rising today alongside general excitement in the AI space. 

Tempus AI (Nasdaq: TEM) is up 12% today. The company closed its acquisition of Ambry Genetics on February 3rd, but the biggest news of the day is TD Cowen reinitating coverage on Tempus with a ‘buy’ rating and a $74 price target. 

Yet, after today’s jump that price target doesn’t afford much upside. Tempus is now trading for about $70 per share. Shares of Tempus gained a significant following after Nancy Pelosi bought shares of the company on January 13th. Since that date, Tempus shares are now up 115%. 

Finally, SoundHound AI (Nasdaq: SOUN) is on the move today. The company is up a more muted 2.1% and appears to be riding enthusiasm in the AI space versus any specific company news. SoundHound shares are down 20% in the past month, but if you look at returns since October 1st, the company’s shares are up 250%. 

Wall Street expects SoundHound to report $83.9 million in sales this year, which jumps to $164 million next year. Its growth rates are significantly ahead of many other smaller AI stocks investors have piled into. The company will report in early March, likey within a couple days of BigBear.ai. 

 

 

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