The travel industry has been on an upward trajectory since the pandemic. Booking Holdings (BKNG +0.51%) has ridden the industry's growth by delivering strong financial results.
It could be a tempting buy, given the stock's 28% decline from recent highs. However, artificial intelligence (AI) presents both opportunities and risks that the company must navigate.
Here's a quick look at where the business stands and whether it's worth buying this month.
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Booking's competitive advantage
Booking Holdings owns popular travel sites including Booking.com, Priceline, Agoda, Kayak, and OpenTable. They generate revenue from fees and commissions, supporting strong margins and a capital-light business model.
Across these platforms, Booking connects travelers with more than 4 million properties worldwide. That helped drive a 13% year-over-year increase in revenue last year, to nearly $27 billion.
There are several ways for travelers to book trips, but Booking's competitive edge is its scale and broad property supply. About 90% of the 1.2 billion room nights booked last year came from independent hotels, small chains, and alternative accommodations.
NASDAQ: BKNG
Key Data Points
But the company isn't relying only on supply. Its Connected Trip strategy aims to offer more services, including hotel-plus-flight packages, car rentals, and attractions. In 2025, Booking's platforms sold 68 million airline tickets, up 37% year over year, while attraction tickets jumped nearly 80%. That expansion could become a durable and profitable growth driver for shareholders.
Still, investors must balance those opportunities against AI risks and macro headwinds that could pressure travel spending.
Will AI derail Booking's momentum?
Several headwinds could weigh on travel demand this year. Consumers are already dealing with higher gasoline prices tied to geopolitical conflict. For Booking, weaker discretionary spending could translate into shorter stays and lower revenue.
Over the long term, the bigger risk is AI making it easier for other companies to compete. If autonomous agents start shopping and booking by scanning deals across many sites at once, the platform that travelers use today could matter less. That could weaken Booking's standing in the marketplace and pressure growth.
However, Booking has advantages to counter this threat. Its broad portfolio of independent properties and data gives it a strong foundation for using AI to improve discovery and conversion. By investing in generative AI and pairing it with its Connected Trip strategy, the company can make planning faster, more personalized, and more seamless.
The setup for investors is attractive. At about 16 times this year's earnings, the stock's valuation looks compelling if Booking can use AI-powered personalization to protect and extend its lead. Long term, management is targeting roughly 8% annual bookings growth and more than 15% annualized earnings-per-share growth.
If results miss those goals and it's not due to an industrywide slowdown, it may signal that Booking is losing its competitive edge, which would be a reason to sell the stock. But for now, investors might want to give the company the benefit of the doubt and look at the sell-off as a buying opportunity.
