Why BigBear.ai Stock Skyrocketed This Week

BigBear.ai (NYSE: BBAI) stock posted big gains over the last week of trading. The company's share price ended Friday's daily trading session up 23.4% from the previous week's market close, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index closed out the week down 2%, and the Nasdaq Composite index ended the stretch down 2.3%.

Despite bearish news on interest rates from the Federal Reserve this week, BigBear.ai stock managed to record explosive gains. The company's share price closed out the period with a dramatic increase thanks to new contract and partnership wins.

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BigBear.ai stock surges despite big bearish news from the Fed

On Monday, BigBear.ai published a press release announcing a new partnership with Proof Labs. Through the partnership, BigBear will be working on a cyber resilient on-orbit (CROO) cybersecurity solution intended for use by the U.S. Air Force. The news powered a day of big gains for the company's stock.

On Thursday, the software specialist announced that it had won a new 10-year contract with the U.S. General Services Administration (GSA). The contract has no maximum contract value and is intended to cover multiple projects for streamlining procurement for civilian and defense projects.

The company's share price initially shot higher on the GSA news, but it actually closed out the day in the red as investors pivoted away from riskier growth stocks following commentary from Fed Chairman Jerome Powell. The Fed now expects to deliver only two rate cuts of 25 basis points next year, down from its previous forecast suggesting four rate cuts of that size. BigBear stock did manage to see gains in Friday's trading amid a rebound for the broader market.

What comes next for BigBear.ai?

BigBear.ai stock has been volatile lately, with shares seeing big swings in conjunction with contract wins, macroeconomic risks, and meme-stock momentum. This week's contract wins provided some substantive bullish news for the company, but investors should keep in mind that it's difficult to weigh the significance of these new deals without knowing more specifics.

Notably, Proof Labs is the primary contract in the deal with U.S. Air Force -- with BigBear.ai serving in a contractor role. Additionally, the contract with the U.S. GSA appears to be highly flexible and makes no mention of the minimum contract value. In its last quarterly conference call, BigBear management indicated that it was seeing hesitance from government customers when it came to AI spending, and it's not clear whether recent wins represent a meaningful departure from that outlook.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.