Why BigBear.ai Stock Is Plummeting Today

BigBear.ai (NYSE: BBAI) stock sold off sharply in Monday's trading. The company's share price was down 12.3% as of 3:25 p.m. ET. Meanwhile, the S&P 500 index was down 0.1%, and the Nasdaq Composite index was down 0.7%.

BigBear.ai's slide comes as some investors reposition their portfolios ahead of Nvidia's fourth-quarter earnings report, which is scheduled for release on Wednesday. The company's share price is likely also being influenced by a big sell-off in Palantir stock.

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Nvidia and Palantir are factors in BigBear.ai's stock slump

Some investors are reducing their tech sector holdings ahead of Nvidia's fourth-quarter earnings report, and artificial intelligence (AI) companies with growth-dependent valuations are experiencing particularly pronounced pullbacks. BigBear.ai falls into that category. Investors appear concerned about the potential for high market volatility if Nvidia's Q4 numbers and guidance come in weaker than anticipated.

Palantir's stock slide is likely also weighing on BigBear.ai. While Palantir is much bigger and more influential than BigBear.ai, the two companies operate in similar segments of the AI market -- and some investors view the larger company as a model for the smaller company's growth trajectory and outlook. Palantir was down by 10.8% as of 3:25 p.m. ET.

What comes next for BigBear.ai?

It's likely that BigBear.ai's share price will see a substantial swing this week in reaction to Nvidia's Q4 report. However, a bit further out, there's another catalyst on the horizon that could have a big impact on its valuation.

BigBear.ai is scheduled to publish its own fourth-quarter results after the market closes on March 6. In Q3, its sales increased 22% year over year to reach $41.5 million -- and the company said that it expected sales for the year to come in between $165 million and $180 million. The target points to a substantial sales growth acceleration in Q4, but investors will also be looking to see if the company has delivered margin improvements.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.