On August 7, Airbnb, Inc. (NASDAQ:ABNB) shares surged to a more than four-year high after the company raised its full-year revenue forecast. The firm gave artificial intelligence credit for cutting costs and speeding up how fast it ships new features.
Its competitor Booking Holdings Inc. (NASDAQ:BKNG) had a rougher time delivering good news: On August 4, the firm beat second-quarter estimates but trimmed its full-year gross bookings forecast. It blamed ongoing fallout from the Middle East conflict on international travel.
Why AI Wasn’t Enough to Erase Middle East Risk
Airbnb now expects 2026 revenue to grow at least a mid-teens percentage, up from its earlier low- to mid-teens call, after posting second-quarter revenue of $3.61 billion, up 17% and ahead of the $3.57 billion Wall Street wanted. CEO Brian Chesky didn’t hold back, calling AI the best thing to ever happen to Airbnb and pointing to a 16% drop in customer support costs per booking as proof.
Booking Holdings Inc. (NASDAQ:BKNG) made a similar case for its own AI investments. CFO Ewout Steenbergen said the company is already seeing a positive return. Argus Research backed that up by raising its price target to $245 from $210 on August 10. Yet Booking still cut its full-year bookings outlook to high-single-digit growth from a prior high-single- to low-double-digit range. The firm warned that reduced Middle East travel and pricier airfares will stick around through the third quarter.
If AI is paying off at both companies, why did only one of them feel good enough to raise its outlook?
Airbnb’s Bull and Bear Case
Airbnb, Inc. (NASDAQ:ABNB)’s numbers support its bull case. Earnings per share of $1.37 beat the $1.26 estimate, and gross booking value climbed 16% to $27.2 billion. Third-quarter revenue guidance of $4.69 billion to $4.77 billion topped the $4.61 billion Wall Street expected. Hotel nights are growing three times faster than home nights too, which is real evidence that the diversification push is working.
On the negative side, the stock price is very high. It is currently at its highest price in four years, which means people already expect the company to perform extremely well. For the stock price to keep rising, the money the company saves by using AI needs to stay high, even as it spends more and more money on AI services.
Booking Holdings’ Bull and Bear Case
Booking Holdings Inc. (NASDAQ:BKNG)’s quarter was strong on paper. Adjusted earnings per share of $2.54 beat the $2.45 estimate, and revenue of $7.35 billion cleared the $7.19 billion analysts wanted. Argus’s fresh $245 price target points to real room for Booking.com to keep growing across Asia, Latin America, and North America.
The trimmed bookings guidance tells a more cautious story than Airbnb’s, though. CEO Glenn Fogel said reduced Middle East travel and elevated airfares will probably weigh on results through the third quarter.
Insider Monkey’s Hedge Fund Data
Insider Monkey’s hedge fund database backs up the split reaction. Airbnb picked up hedge fund interest, with 87 holders as of Q1 2026, up from 80 the quarter before, and the dollar value hedge funds held rising from about $5.05 billion to $5.21 billion. Booking Holdings Inc. (NASDAQ:BKNG) lost ground instead, down to 95 holders from 109, with the value held falling from roughly $8.63 billion to $6.63 billion.
Expedia, another travel peer, also saw its holder count slip to 62 from 70.
Conclusion
Both companies point to AI as a real driver of returns, but only Airbnb, Inc. (NASDAQ:ABNB) felt confident enough to raise its outlook this week. Booking’s caution over Middle East travel is a reminder that the travel industry’s recovery still isn’t landing evenly across the board.
Overall, hedge funds favor Booking Holdings Inc. (NASDAQ:BKNG) over Airbnb.
While we acknowledge the risk and potential of ABNB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ABNB and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
