Core Insights - Artificial intelligence is transforming hotel room search and booking processes, with platforms like DirectBooker providing AI agents real-time access to hotel rates and availability [1] - Online travel agencies such as Booking Holdings, Expedia Group, and TripAdvisor are well-positioned to leverage AI-driven booking [1] AI Impact on Travel - The CEO of DirectBooker, Sanjay Vakil, discussed AI's potential in travel, emphasizing the challenges of autonomous hotel booking due to technical barriers [2][3] Market Fragmentation - The global hotel market is highly fragmented, with over 1.1 million hotels, while the top 15 chains only account for about 4% of total supply [4] - Aggregating long-tail inventory is a significant challenge for AI platforms, a problem that Booking and Expedia have been addressing for decades [4] Competitive Landscape - Lower-cost distribution may attract hotels to new aggregation platforms, but speed and scale still favor established players like Booking and Expedia [5] Monetization Strategies - AI monetization is expected to follow paid search auction models, rewarding platforms with the widest selection and highest conversion efficiency [6] - TripAdvisor benefits from extensive hotel content and brand trust, but transactional scale continues to favor Booking and Expedia [6] Valuation Outlook - For Booking Holdings, a 12-month price forecast of $6,250 is set, based on a 2026 price-to-earnings multiple of 25, reflecting earnings growth similar to large-cap internet peers [7] - Expedia's forecast of $275 corresponds to a 17-times multiple on 2026 GAAP EPS, aligned with an expected EPS growth rate of about 25% [7]

Core Insights - Artificial intelligence is transforming hotel room search and booking processes, with platforms like DirectBooker providing AI agents real-time access to hotel rates and availability [1] - Online travel agencies such as Booking Holdings, Expedia, and TripAdvisor are well-positioned to leverage AI-driven booking [1] AI Impact on Travel - Investors are increasingly anticipating that AI agents will autonomously book hotels, although technical challenges exist that necessitate intermediaries [3] Market Fragmentation - The global hotel market is highly fragmented, with over 1.1 million hotels, while the top 15 chains only account for about 4% of total supply [4] - Aggregating long-tail inventory is a significant challenge for AI platforms, a problem that Booking and Expedia have been addressing for decades [4] Competitive Landscape - Lower-cost distribution may attract hotels to newer aggregation platforms, but speed and scale still favor established incumbents like Booking and Expedia [5] Monetization Strategies - AI monetization is expected to resemble paid search auction models, rewarding platforms with the widest selection and highest conversion efficiency [6] - TripAdvisor benefits from extensive hotel content and brand trust, but transactional scale continues to favor Booking and Expedia [6] Valuation Outlook - For Booking Holdings, a 12-month price forecast of $6,250 is set, based on a 2026 price-to-earnings multiple of 25, reflecting earnings growth similar to large-cap internet peers [7] - Expedia's forecast of $275 corresponds to a 17-times multiple on 2026 GAAP EPS, aligned with an expected EPS growth rate of approximately 25% [7]

Industry Overview - U.S. travel spending is projected to grow 2.2% in 2026, reaching $1.2 trillion, driven by sustained consumer demand and supportive monetary policy [2][8] - Domestic leisure travel is expected to expand 1.9% to $920.5 billion, while international inbound travel is forecasted to grow by 3.7% to 70.4 million visits, supported by major events like the FIFA World Cup [3] Macroeconomic Factors - The Federal Reserve's three consecutive interest rate cuts in 2025 have reduced the federal funds rate by 75 basis points, enhancing consumer spending capacity in discretionary categories, including travel [4] - Projected GDP growth of 2.3% for 2026 indicates favorable economic conditions for continued leisure spending momentum [4] Emerging Travel Trends - Travelers are increasingly seeking wellness-focused retreats and quiet escapes due to digital fatigue, while AI integration in booking platforms is streamlining trip planning [5] - There is a growing interest in literary and film-inspired travel, and road trips are resurging as cost-conscious travelers seek affordable alternatives [5] Company Performance - Expedia Group has shown a 27.2% increase in stock price over the past three months, driven by B2B momentum and margin expansion, with a projected EPS of $18.23 for 2026 [6][10] - Airbnb's stock increased by 6.4%, supported by diversification initiatives, with an expected revenue growth of approximately 9.7% to $13.49 billion for 2026 [6][15] - Booking Holdings' stock declined by 1.8% despite strong operational results, with a projected EPS of $262.93 for 2026, reflecting its dominant position in the travel market [6][13] - TripAdvisor's stock fell by 23.1% as it transitions to an experiences-focused marketplace model, with a projected EPS of $1.69 for 2026 [6][12]

Core Insights - Tiqets, an Amsterdam-based platform for museum and attraction tickets, has been acquired by Expedia after an extended sales process [1] - The acquisition price is not significant enough to impact Expedia's financials, and the deal is expected to close in the first quarter of 2026 [4] Group 1: Sales Process and Stakeholders - Tiqets underwent a formal sales process with Barclays advising on the sale, exploring multiple buyer options [1] - Airbnb, which previously led a $60 million funding round for Tiqets in 2019, did not proceed with a purchase, despite initial expectations from Tiqets' founders and shareholders [2] - Booking.com, another potential buyer, was also considered, raising questions about why these natural competitors did not acquire Tiqets [2] Group 2: Financial Context - Tiqets took out a €25 million ($29 million) loan in June to refinance debt, indicating financial urgency and the need for a timely sale [3] - The company has raised approximately $105 million in venture funding since its founding in 2014, highlighting its financial challenges [3] Group 3: Deal Valuation and Employee Impact - Tiqets informed at least one employee that the acquisition could be valued at around $100 million, considering stock options, but preferred shareholders would be paid first [5] - The actual deal value could exceed $100 million when accounting for the distribution among common shareholders [5] Group 4: Strategic Implications for Expedia - The acquisition provides Expedia with direct access to major European attractions, enhancing its B2B offerings and reducing reliance on third-party revenue sharing [8] - Tiqets competes with larger platforms like Viator and GetYourGuide, but its limited proprietary technology presents challenges in creating substantial value [7]

Core Insights - U.S. stock markets have experienced a significant rally in 2023, largely driven by advancements in artificial intelligence, with notable performance from non-tech companies as well [1][2] Group 1: Company Highlights - General Motors Co. (GM) holds a 17% market share as the top-selling U.S. automaker, benefiting from strong demand across its brands and a 10% year-over-year sales increase in China [6][7] - GM's software and services division generated $2 billion in revenue by the end of Q3 2025, with 11 million OnStar subscribers, indicating a shift towards software-led growth [7] - Robinhood Markets Inc. (HOOD) is seeing improved trading activity and higher net interest income, with a focus on product diversification to enhance its market position [10][11] - Expedia Group Inc. (EXPE) operates a robust platform that connects travelers and suppliers, leading to stable demand and increased gross bookings, supported by a strong brand portfolio [13][14] - Dillard's Inc. (DDS) is enhancing its customer base through store and online improvements, with a focus on fashionable merchandise driving traffic and better-than-expected earnings [15][16] - Five Below Inc. (FIVE) is experiencing strong momentum with traffic gains and improved marketing effectiveness, leading to an upward revision of its full-year sales expectations to $4.62-$4.65 billion [18][19] Group 2: Financial Performance and Projections - GM has an expected revenue growth rate of -0.3% and an earnings growth rate of 12.9% for the next year, with a 0.5% improvement in the Zacks Consensus Estimate for earnings [8] - HOOD's expected revenue and earnings growth rates are 21% and 17.9%, respectively, with a 1.8% improvement in the earnings estimate [12] - EXPE's expected revenue and earnings growth rates are 6.3% and 20.8%, respectively, with a 3.2% improvement in the earnings estimate [14] - DDS has an expected revenue growth rate of 0.7% and an earnings decline of -8.2%, with a 5.3% improvement in the earnings estimate [17] - FIVE's expected revenue and earnings growth rates are 8.6% and 5.6%, respectively, with a 1.3% improvement in the earnings estimate [20]

Industry Overview - The global travel industry is entering a new growth phase, driven by durable demand and structural shifts in consumer behavior [1][5] - Travel activity is supported by pent-up demand, leading to record bookings and a broadening opportunity set beyond traditional tourist hotspots [2][4] Air Travel - Air travel volumes are nearing or exceeding pre-2020 levels, with strong hotel occupancy and room rates across leisure and business destinations [2] - Airlines are managing capacity more carefully, focusing on premium cabins and international routes, which positions them for sustained demand [3][7] - Delta Air Lines is highlighted for its emphasis on premium offerings and disciplined growth, with projected sales growth of 3.6% and earnings growth of 20.2% by 2026 [9][10] Online Travel Platforms - Expedia Group is benefiting from travelers increasingly booking entire trips online, leveraging its scale and technology to drive growth [12][13] - The company is projected to see sales rise by 6.3% and earnings grow by 20.8% year over year by 2026, reflecting strong market positioning [14] Hotel Industry - Hilton is experiencing strong net unit growth and hotel conversions, with a focus on expanding its luxury portfolio and maintaining a capital-light model [15][16] - The company anticipates 9% sales growth and 14.2% earnings growth by 2026, supported by a robust development pipeline [17] Conclusion - The travel industry is transitioning to a durable growth cycle, with Delta Air Lines, Expedia Group, and Hilton positioned to capitalize on sustained tourism growth and deliver steady earnings momentum through 2026 and beyond [18][19]

Expedia Group, Inc. (EXPE) is a major travel technology company and one of the world’s largest online travel platforms. Headquartered in Seattle, Washington, it operates a broad portfolio of travel brands and digital services that enable consumers and partners to research, plan, book, and manage travel across flights, hotels, vacation rentals, car rentals, cruises, and activities With a market cap of $34.7 billion, the company is firmly positioned in the large-cap segment. It generates revenue from trans ...

Summary of Key Points from J.P. Morgan's US Internet 2026 Outlook Industry Overview - The report focuses on the **US Internet** sector, providing insights into market performance, macroeconomic factors, and company-specific forecasts for 2026. Core Insights and Arguments 1. **2025 Performance Recap**: - The internet sector outperformed the S&P 500 by 17% in 2025, with average performance across market caps showing significant variation: - Large Cap: +19% - Mid-Cap: +42% - Small Cap: +21% - Smaller Cap (<$2B): -16% [12][13] 2. **2026 Macro Outlook**: - J.P. Morgan economists estimate a **35% risk of recession** in 2026, with expectations of resilient global growth driven by fiscal stimulus and capital expenditure [19][23]. - Key economic indicators include: - GDP Growth: 1.8% in 2026 - Inflation: Expected to remain above 3% CPI - Unemployment: Projected to peak at 4.5% in Q1 2026 [21][19]. 3. **Investment Recommendations**: - **Top Picks for 2026** include: - Alphabet (Overweight, $385 PT): Growth driven by AI and cloud services [46]. - Amazon (Overweight, $305 PT): Expected growth in AWS and retail segments [51]. - DoorDash (Overweight, $300 PT): Anticipated GOV growth of 18% CAGR from 2025-2028 [57]. - Spotify (Overweight, $805 PT): Projected revenue growth driven by premium subscriptions [66]. 4. **AI and Cloud Growth**: - AI is expected to significantly drive cloud growth, with Google Cloud projected to grow in the mid-40% range and AWS adding the highest estimated revenue in 2026 [101][102]. - The report highlights the importance of AI in enhancing operational efficiencies and driving revenue growth across various sectors [78]. 5. **Valuation Metrics**: - The S&P 500 is projected to have a price target of **$7,500** by the end of 2026, suggesting a 9% upside [26]. - Internet companies are trading at an average of **10.2x 2027E EV/EBITDA**, with expected revenue growth of approximately **13% CAGR** from 2025 to 2027 [40]. Additional Important Insights 1. **Market Dynamics**: - The report discusses the competitive landscape in the AI space, noting that leading model developers like Google and OpenAI are pushing the frontier, but competition remains intense [89][94]. - The potential for AI-driven advertising and e-commerce growth is highlighted, with expectations for significant market share shifts in the online ad market [112]. 2. **Company-Specific Catalysts**: - Alphabet's AI tools are expected to enhance productivity and revenue, while Amazon's AWS is set to double its capacity by 2027 [56][88]. - DoorDash is focusing on expanding its marketplace and improving unit economics, while Spotify is ramping up its free cash flow and operating margins [60][68]. 3. **Key Questions for 2026**: - The report raises critical questions regarding AI monetization, the impact of AI on cloud growth, and the potential for disruption in various sectors, including travel and e-commerce [76][124]. This summary encapsulates the essential insights and projections for the US Internet sector as outlined in the J.P. Morgan report, providing a comprehensive overview of the anticipated trends and investment opportunities for 2026.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Online Travel Agents (OTAs) sector, specifically analyzing companies such as Airbnb (ABNB), Booking Holdings (BKNG), Expedia (EXPE), and Tripadvisor (TRIP) [1][2][3][4][5]. Core Insights and Arguments Demand and Traffic Trends - Q4 demand for OTAs is strong, with traffic data indicating volumes are running 1-2% ahead of consensus expectations [1]. - Specific traffic growth estimates for Q4 include: - TRIP: 1% beat - ABNB/BKNG: 1.5% beat - EXPE: 2% beat [2]. - Booking and Expedia have experienced double-digit web traffic growth in November, while Airbnb has not seen similar acceleration [2]. Company-Specific Insights Airbnb (ABNB) - Airbnb's stock has been stagnant due to decelerating top-line growth, but there are signs of potential acceleration with QTD data suggesting a growth increase from 18% to 20% [3]. - New initiatives, including natural language search and partnerships, are expected to drive growth [3]. - Q4 projections indicate 119.1 million nights booked, slightly ahead of consensus [38]. Booking Holdings (BKNG) - Booking is expected to beat its Q4 targets, driven by a growing B2B push and strong web traffic [4]. - The company is focusing on AI opportunities, including a widening Total Addressable Market (TAM) and launching tools for better cross-selling [39]. - Estimated room night growth for Q4 is 7.8%, ahead of guidance [19]. Expedia (EXPE) - Expedia has turned a corner operationally, with strong Q4 traffic trends and expected room night growth of 9.5% [49]. - Despite this, revenue growth remains slower than Booking, raising concerns about its higher valuation multiple [5]. Tripadvisor (TRIP) - Tripadvisor's traffic is mixed, with Viator showing growth while TheFork has slowed [60]. - Total revenue expectations for Q4 are slightly ahead of consensus, driven by Viator's performance [61]. Additional Important Insights - The ongoing debate about AI's impact on the OTA sector remains a key risk, with concerns about AI agents potentially disrupting pricing and data access [1]. - The World Cup is anticipated to provide a boost to Airbnb's volumes, with a potential $3.6 billion impact [51]. - Booking's CFO highlighted a $170 million investment program aimed at growth initiatives, indicating a proactive approach to market challenges [39]. Investment Ratings - Ratings for the companies are as follows: - Airbnb: Outperform - Tripadvisor: Outperform - Booking: Market-Perform - Expedia: Market-Perform [7]. Conclusion - The OTA sector shows promising demand trends heading into Q4, with individual companies positioned differently based on their growth strategies and market dynamics. The potential impact of AI and macroeconomic factors will be critical to monitor in the coming quarters.

Group 1 - Expedia Group, Inc. is considered a cheaper investment option compared to Booking Holdings, trading at just over 15 times next year's earnings versus roughly 20 times for Booking [1] - The company is projected to achieve an 18% earnings growth next year while selling for 13 times next year's earnings, indicating it is undervalued [2] - Jim Cramer recommends sticking with Expedia due to its strong performance in the third quarter and the resilience of consumers [1][2] Group 2 - Expedia operates various travel platforms offering lodging, flights, car rentals, vacation rentals, and package options [2] - Despite the potential of Expedia, there are suggestions that certain AI stocks may offer greater upside potential and carry less downside risk [2]