AI Stocks Surge as BigBear.ai, Tempus AI, and SoundHound Ride Wave of Enthusiasm Amid Alphabet $75B Investment in AI
The AI sector is heating up today, and it’s not just Alphabet’s earnings driving the momentum. Despite an 8% dip in Alphabet’s stock price after its earnings report, investors are pouring into the AI space following the company’s announcement that it will spend a whopping $75 billion on capital expenditures this year, much of which will go toward expanding AI-driven data centers. This move has sparked a surge in AI stocks across the board, including BigBear.ai, Tempus AI, and SoundHound AI, each seeing strong gains today.
BigBear.ai’s Major Contract Fuels 40% Surge
The standout performer today is BigBear.ai (NYSE: BBAI), which is soaring by about 40% after announcing a government contract this morning. The contract, awarded by the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office (CDAO), aims to enhance BigBear.ai’s Virtual Anticipation Network (VANE) prototype. This contract is designed to assist the Office of the Secretary of Defense (OSD) by using AI models to analyze news media originating from potential foreign adversaries.
The DoD contract signals a crucial win for BigBear.ai, a company that has struggled with consistent revenue growth in recent years. Despite a modest increase in revenue, from $145 million in 2021 to an estimated $168 million in 2024, investors are betting this new contract could spark meaningful growth. The positive momentum follows the 24% jump in Palantir’s stock earlier this week, fueled by similar DoD contracts.
However, it’s important to note that BigBear has not yet provided revenue figures tied to this contract. With BigBear’s shares climbing 330% in the past year, investors are clearly excited about its potential, but the company’s projected revenue for 2024 falls short of its target.
Tempus AI Gains After TD Cowen’s ‘Buy’ Rating
Another stock making waves is Tempus AI (Nasdaq: TEM), which is up 12% today after TD Cowen initiated coverage with a ‘buy’ rating and a $74 price target. This marks the latest in a string of positive developments for Tempus, which closed its acquisition of Ambry Genetics on February 3rd. Since news broke that Nancy Pelosi had purchased Tempus shares in January, the stock has gained a staggering 115%.
At its current price of around $70 per share, Tempus is on the radar of investors betting on the potential of its AI-driven solutions, including advancements in genetic testing and personalized medicine. Despite a large part of the upside already priced in, Tempus’ stock is benefiting from the overall enthusiasm surrounding AI, particularly in the healthcare and genomics sectors.
SoundHound AI Rides the AI Wave
Meanwhile, SoundHound AI (Nasdaq: SOUN) is experiencing a 2.1% rise, continuing its 250% gain since October 1st. Although the company is down 20% over the past month, its impressive growth since the latter half of 2023 is capturing investor interest. SoundHound, a leader in AI-powered voice recognition and speech-to-text technology, is expected to generate $83.9 million in sales this year, with that number projected to more than double to $164 million in 2025.
With SoundHound’s upcoming earnings report expected in early March, Wall Street is watching closely. The company’s rapid growth and strong revenue projections are helping position it as one of the top AI stocks to watch in 2025.
AI Enthusiasm Drives Market Gains
Today’s AI stock rally is part of a broader market trend, with Alphabet’s bold AI spending announcement serving as a catalyst. Alphabet’s $75 billion investment in AI infrastructure and data centers signals the continued expansion of AI across industries, further fueling the excitement surrounding AI stocks. The enthusiasm for BigBear.ai, Tempus AI, and SoundHound AI reflects growing confidence in the AI sector‘s ability to disrupt industries and unlock new opportunities for growth.
As Alphabet and other major tech giants ramp up their investments in AI-driven solutions, companies like BigBear.ai, Tempus AI, and SoundHound are poised to capture a significant portion of this market. Investors will be watching closely to see how these companies leverage their respective technologies to drive long-term growth.
Stay tuned as the AI market continues to heat up, with more companies expected to report strong earnings and innovation in the coming weeks.
