DeepSeek, the Chinese AI start-up, sent shockwaves through the industry just a month ago when it launched its latest model, R1.
The results from the model are comparable to the top models from OpenAI, Google, and other U.S.-based AI developers, and in a research paper it released, DeepSeek said it trained an earlier model for just $5.5 million.
The news sent AI stocks plunging, and while they have recovered some of their gains since then, there are still a lot of questions about what the longer-term impact of DeepSeek will be.
The latest round of capital expenditure forecasts from big tech companies like Alphabet, Meta Platforms, Microsoft, and Amazon makes it clear that spending on AI infrastructure is only going higher.
However, the DeepSeek development also creates something of a bifurcation in the industry as there's now a model for developing cheaper AI chatbots and agents using techniques like DeepSeek.
One CEO that commented on that development on a recent earnings call was Airbnb's (ABNB 0.15%) Brian Chesky. Referring to AI, Chesky said:
"I think it's a really exciting time in the space because you've seen like DeepSeek and more competition with models is models are getting cheaply or nearly free... What I think that means is a lot of value is going to accrue to the platform. And ultimately, I think the best platform, the best applications are going to be the ones that most accrue the value from AI. And I think we're going to be the one to do that with traveling and living."
Image source: Airbnb.
Airbnb's AI plan
In November 2023, Airbnb acquired GamePlanner.AI, a stealth 12-person AI company led by a co-founder of Siri.
At the time, Airbnb said it prized the GamePlanner's expertise in AI, design, and community. That was the bold move for the company, but since then, it seems to have scaled back some of its initial ambitions for it as far as things like planning trip itineraries or detailed recommendations.
However, one area Airbnb focused on leveraging AI is in its customer service, which is a huge need for the company as it gets millions of requests every day, and it needs to be able to respond to them rapidly and effectively, and in every language. This summer, Airbnb plans to release AI-powered customer support, and over the next few years, the company plans to take that model and apply it to Airbnb search and eventually make it a travel and living concierge.
The travel market is enormous, and there's huge potential for AI features to add value for users and a platform like Airbnb, which offers more a wider range of options than hotel-booking platforms like Booking Holdings (BKNG 1.78%) and Expedia (EXPE 0.94%).
Is Airbnb a buy?
Despite the promise of its platform, Airbnb has struggled lately, and the stock badly underperformed both Booking and Expedia over the last year as the chart below shows.
Airbnb's growth rate has tracked similarly to those peers even as it's traded at a loftier valuation. Additionally, concerns about its future growth and ability to expand margins has weighed on the stock.
However, Airbnb shares soared after its fourth-quarter earnings report as the company topped estimates on the top and bottom lines and teased new business ideas. The company hasn't provided many details on those yet, but after saying he intended to expand the business beyond the core earlier, Chesky now sees it becoming an extended platform with new offerings this year. Making experiences and services a larger part of the core platform should be a top priority.
Overall, Airbnb still has a lot of room for growth, especially as it targets new products, and it can still monetize its platform in new ways.
While the last year has been a frustrating for Airbnb shareholders, it still looks like a long-term buy.
