Expedia Group, Inc. (NASDAQ:EXPE) is entering a new phase of the online travel debate. Artificial intelligence may become another channel through which people book rooms, or it may weaken the ability of established booking platforms to attract travelers directly. Expedia Group, Inc.’s September 23 announcement that it would work with Meta’s Muse assistant puts both possibilities into focus. The company could supply bookings to a new interface, but it may also surrender part of the customer relationship to whoever controls that interface.
Expedia Group, Inc. ranks eighth among the 10 best undervalued stocks to buy now according to Reddit. Its ranking is based on hedge fund positioning, not a claim that its travel business is immune to disruption. Which of the seven stocks above it attracted stronger institutional interest, and how many face an equally direct challenge to their customer relationships?
The AI Partnership Cuts Both Ways
Muse is not Expedia Group, Inc.’s only attempt to monetize traffic it does not originate. A September 22 advertising collaboration with Redion extended the company’s advertising business into travel insurance, building on a longstanding protection-services relationship. Neither announcement includes a disclosed near-term contribution to earnings, however. Their importance lies in whether Expedia Group, Inc. can earn commission or advertising revenue when trip discovery moves away from its own websites.
The operating data leave room for both interpretations. In second-quarter 2026 coverage, Expedia Group, Inc.’s gross bookings rose 12%, with business-to-business bookings expanding 21% and B2B revenue rising 23%. That partner business had delivered twenty consecutive quarters of double-digit booking growth. A booking made through a bank, airline or other partner does not depend on an Expedia consumer visiting its own app, supporting an argument that the platform can adapt to new distribution models.
However, Morgan Stanley’s September 16 downgrade identified a different problem: monthly active users were flat year-over-year, compared with growth of roughly 6% at Booking.com and 10% at Airbnb, according to the bank’s estimates. If customer acquisition becomes more expensive while direct traffic stagnates, incremental booking revenue may require more marketing spending. Our earlier report on Morgan Stanley’s Expedia Group, Inc. downgrade examines why rising B2B bookings did not fully answer the bank’s concern about consumer engagement.
What the Discount Already Assumes
The Seeking Alpha data places Expedia Group, Inc. at 17.07 times trailing GAAP earnings and 14.76 times forward GAAP earnings. On a non-GAAP basis, the forward P/E is 13.07 times, compared with the company’s five-year average of 23.84 times and the sector median of 14.84 times. Forward enterprise value to EBITDA is 7.94 times, versus 9.30 times for the sector and 8.91 times for Expedia Group, Inc.’s five-year average. The shares therefore carry a discount on several forward measures, though the relevant issue is whether the earnings behind those measures can hold up.
The same consensus projects EPS growth of 32.54% for 2026, slowing to 16.72% in 2027, 14.33% in 2028, and 3.45% in 2029. At the current share price, implied estimated earnings multiples descend from 13.07 times in 2026 to 11.20 times in 2027, and 9.79 times in 2028. That trajectory assumes Expedia Group, Inc. continues converting bookings into rising per-share profit while AI-related disruption remains manageable. It does not price a proven collapse in the intermediary model, nor does it guarantee that one will not occur.
There is a balance-sheet dimension to the discount as well. The data shows $7.13 billion of cash and $5.69 billion of debt, leaving net cash of approximately $1.44 billion before other obligations. It also places trailing price-to-cash-flow at 6.32 times against an 8.79-times sector median. Cash generation and repurchases can support per-share earnings during slower organic growth, but neither can permanently protect the multiple if the cost of winning travel bookings rises.
Wall Street Is Debating the Speed, Not Just the Direction
Wells Fargo cut its target to $275 from $307 on October 7 while maintaining Equal Weight, expecting the third quarter to mark a low point in room-night growth and describing choppy demand. Truist reduced its target to $288 from $309, keeping Hold, and warned that the AI threat was still more clearly visible in sentiment than in demonstrable profit erosion. Morgan Stanley took the firmer Underweight stance at $235, citing weaker consumer differentiation and risks from suppliers selling directly.
Those views differ in severity but meet at the same question: how much future distribution and marketing expense should be embedded in today’s earnings estimates?
A useful comparison is Airbnb, whose inventory and direct traffic may be harder for AI booking agents to reproduce. Why does Airbnb’s growth command a different valuation, and how does that comparison change the Expedia Group, Inc. debate? Expedia Group, Inc.’s strength in partner distribution is real; the difficulty is deciding how much protection it provides if consumer-facing discovery migrates elsewhere.
Institutional Positioning Shows the Disagreement
Hedge fund holders declined from 62 in Q1 to 55 in Q2 2026. Meanwhile, reported short interest increased from 5.20 million shares on August 31 to 7.92 million on September 30, representing 8.50% of the float. Those observations cannot identify why individual investors traded, but they provide context for a valuation that appears undemanding relative to its history. A separate Booking-versus-Airbnb comparison illustrates how margins, proprietary supply and cash flow can reshape the online travel valuation hierarchy.
For Expedia Group, Inc., the deciding variables are partner bookings growth, consumer user retention and whether any AI-driven bookings preserve sufficient economics to support consensus EPS.
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