We recently compiled a list of the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Airbnb, Inc. (NASDAQ:ABNB) stands against the other oversold blue chip stocks.
The uncertainty related to the tariff announcements continues to influence Wall Street. Reuters reported that the S&P 500 is down 4.3% since Trump took office on January 20, and tariffs are the main concern for investors as they believe that can adversely impact the economic growth and be inflationary. While Trump believes that tariffs can increase the country’s revenue, fuel broad-based growth, and can be used as a negotiating tool with other countries, the investors believe that trade policies can weaken consumer confidence and limit the capital spending from companies.
Long Term Outlook Remains Intact
As per Franklin Templeton, the US equities have managed to provide strong gains over the past few years, with the S&P 500 repeatedly touching record highs, thanks to the Magnificent Seven’s dominance in AI. Despite elevated valuations, the broader market outlook is positive. Innovation and investment continue at a pace, sales growth has been accelerating, and earnings are expected to see a double-digit rise this year. Also, the US economy has a more business-friendly administration. That being said, there are risks, mainly related to the US trade policy and the expected impact of tariffs on critical sectors, including technology.
Amidst such uncertainties, Franklin Templeton believes that investor confidence in the US equities is expected to remain strong. While the risks might be elevated, the new administration’s policy changes are expected to finally result in long-term positives for the broader US economy.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Blue Chips to Provide Shelter
While the Mag 7 stocks are well-placed for the long-term growth, the market leadership is expected to broaden as and when acceleration in innovation occurs, says Franklin Templeton. The investment firm believes that active management is of utmost importance. The pivot from AI infrastructure to platforms remains well underway. Therefore, identifying the right companies at the right time—ones possessing the technology, strategy, and adaptability to maintain and sustain long-term growth—are expected to be critical to investment success.
The US equities, mainly large caps, have been performing strongly, courtesy of the innovation and investment. Notably, over the past 6 months, the Dow Jones Industrial Average has seen an increase of over ~4.5%. Even though the Mag 7 stocks continue to support the market momentum, the investment firm sees growing opportunities beyond such market leaders. With the continuation of AI-driven cycle, the competitive landscape remains dynamic and has been creating new growth areas.
Our Methodology
To list the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds, we used a screener and the SPDR S&P 500 ETF to shortlist the companies that have declined over the past year. Next, we chose the stocks that are popular among hedge funds, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A vacation home luxury bedroom setup with stunning decor showing a desired getaway experience.
Airbnb, Inc. (NASDAQ:ABNB)
% Decline Over Past 1 Year: ~17.5%
Number of Hedge Fund Holders: 54
Market Cap as on March 7: $84.7 billion
Airbnb, Inc. (NASDAQ:ABNB) is engaged in operating a platform that enables hosts to offer stays and experiences to guests. Susquehanna upped the company’s price target to $200 from $160, keeping a “Positive” rating. As per the firm, they posted a strong Q4 2024, thanks to the healthy travel demand and certain internal product improvements. In Q4 2024, Airbnb, Inc. (NASDAQ:ABNB)’s revenue came in at $2.5 billion, reflecting an increase of 12% YoY. As per the analyst, while the outlook was a bit below expectations, mainly because of calendar effects and FX headwinds, management demonstrated that favourable demand trends continued into 2025.
Elsewhere, Bernstein increased the target price to $185 from $158, keeping an “Outperform” rating on Airbnb, Inc. (NASDAQ:ABNB)’s stock post the Q4 2024 print. The firm believes that 2025 is the year in which Airbnb, Inc. (NASDAQ:ABNB) will start its journey to add products over and above its core business, all with billion-plus potential. Amanda Tan, an analyst from DBS, maintained a “Hold” rating, with the price target of $150.00. Despite the challenges, the company’s disciplined operational model and growth potential in new markets aid the analyst’s rating, implying a balanced view of the risks and opportunities.
Oakmark Funds, advised by Harris Associates, released its Q4 2024 investor letter. Here is what the fund said:
“Airbnb, Inc. (NASDAQ:ABNB) is an online marketplace to list, discover and book unique accommodations worldwide. The company benefits from a strong network effect between its guests and hosts. We believe there is a long growth runway as global travel is an attractive market, and alternative accommodations have been taking share. We anticipate Airbnb will drive further growth by creating more valuable services for both sides of its network, which includes the potential for paid placement, which has created significant economic value for comparable market places. In our view, management is aligned shareholders and well qualified to lead Airbnb as the company attempts to capture these growth opportunities. Short-term concerns about the macro travel environment and declining margins stemming from growth investments allowed us to purchase shares at a discount to our estimate of business value.”
Overall ABNB ranks 10th on our list of the oversold blue chip stocks to buy according to hedge funds. While we acknowledge the potential of ABNB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ABNB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.