Booking Holdings is currently trading at 15.3 times forward earnings, significantly lower than its 10-year average of 22.3 times, despite consistently achieving its long-term growth objectives. Concerns regarding AI's impact on the travel industry have not materialized in Booking's results, with less than 1% of room nights coming from large language model referrals.
The company has reported strong growth in direct bookings and has structural advantages that protect its core business from AI competition. However, the stock has been affected by three main factors: fears of AI disintermediation, geopolitical tensions in the Middle East affecting travel, and currency exchange rate fluctuations that have distorted reported growth figures.
Notably, while AI has impacted Kayak, Booking's metasearch brand, it has not significantly affected its core operations. Booking's business model, which includes both agency and merchant models, allows it to maintain control over transactions, making it less vulnerable to AI disruptions. The company is actively enhancing its AI capabilities to improve customer experience and streamline operations.
Despite recent stock volatility, Booking's performance aligns with its long-term growth targets, indicating a potential upside for investors as the market may be undervaluing the stock