Booking upgraded at Bank of America as AI risks are ’overdone’

Investing.com -- Bank of America has turned more constructive on Booking Holdings, upgrading the stock to Buy after concluding that concerns around artificial intelligence are weighing too heavily on sentiment.

The bank’s analyst Justin Post argues that recent fears about Google and OpenAI’s agentic travel tools are “overdone,” with Booking now trading at just 16 times 2027 earnings.

Shares in Booking rose 1.2% in premarket trading by 07:02 ET. 

Post says the company’s positioning with suppliers gives it meaningful protection. Booking generates under 10% of its bookings from large hotel chains and has more than half of its room nights coming from suppliers directly linked to its platform.

These relationships are “hard for AI agents to get links,” he said, and help support Booking’s ability to negotiate favorable economics in potential AI distribution deals.

The analyst also highlighted that the Genius loyalty program, which represents over 50% of bookings, remains a powerful anchor for user behavior.

Post views the current setup as a margin and earnings growth story despite the elevated investment cycle. Booking has increased its annual cost-savings target to $500–$550 million, with a $280 million run rate already achieved through the third quarter.

He expects margin expansion in 2026 and potential buyback acceleration following the recent share-price pullback “to drive 16% earnings growth in 2026.”

“AI traffic is currently low cost, and even if OpenAI/Google start adding Agentic revenue take rates, Booking is in a good position for AI deals given supplier/consumer positioning,” he added.

Adding to BofA’s constructive view, early fourth-quarter trends remain solid. In Europe, revenue per available room (RevPAR) accelerated to 12% year-on-year in October from 9% in September, while U.S. nights growth improved to high-single-digit levels across the OTA sector in the third quarter and continued into October.

While year-on-year comparisons will tighten in November and December, Post forecasts a sequential acceleration in bookings growth in the first quarter of next year. FX is also set to remain a tailwind into the fourth quarter and the first quarter of 2026, given Booking’s heavy international exposure.

On the valuation front, Bank of America highlights that Booking trades at roughly 18 times its 2026 price-to-earnings (P/E) and 14 times forward EV/EBITDA—both slightly below historical averages.

Looking ahead to 2027, the stock sits at around 15.5x earnings, well below the 2025 valuation peak of 20x and the long-term average of 19x.

In a scenario where the AI overhang eases, Post believes the multiple could expand back toward 20x.

Bank of America reiterated its price objective at $6,000 based on 20x 2027 earnings.