The last time Booking Holdings Inc. (BKNG) saw this kind of pressure, the world was literally shutting down. Airports were empty. Hotels were closed. It made a grim sort of sense.

This time? Planes are packed. Hotels are buzzing. Earnings are coming in above expectations. And yet, the stock is on track for its worst month in 16 years. Go figure.

Shares of Booking have tumbled sharply, dragging peers Expedia Group (EXPE) and Tripadvisor Inc. (TRIP) down with it. The trigger this time isn't a pandemic or an energy shock. It's artificial intelligence. The market is suddenly terrified that a chatbot might be a better travel agent.

A Brutal Month For Online Travel Stocks

Let's talk numbers. Booking Holdings has plunged 24% month-to-date, which would be its worst monthly performance since May 2010. Expedia has dropped roughly 27%, and Tripadvisor is down about 22% over the same period.

Here's the weird part: this selloff is happening despite fundamentally strong earnings from the major players. That tells you the pressure isn't about deteriorating demand today. It's a forward-looking bet—or a fear—about what happens tomorrow. Investors are repricing the entire online travel agency (OTA) space on the idea that generative AI, from chat-based assistants to new "agentic" booking tools, could simply cut out the middleman. Why go to Booking.com when an AI can scan every hotel, airline, and rental car site for you directly?

Booking Doubles Down On AI

Booking isn't just sitting there watching its stock price fall. The company is stepping up spending to make sure it's part of the AI future, not a victim of it.

Bank of America analyst Justin Post noted last week that Booking delivered a solid fourth-quarter beat. Gross bookings came in at $40.2 billion, above Street expectations. EBITDA reached $2.2 billion versus $2.1 billion expected. Revenue rose 16%, supported by 9% room-night growth, also ahead of consensus. Good stuff.

But the guidance pointed to more modest margin expansion ahead, partly because Booking is opening its wallet. The company outlined roughly $700 million in total strategic reinvestments for 2026—with about a $300 million net EBITDA impact. That money is focused on generative AI development, its Connected Trip initiative, fintech expansion, loyalty growth, and geographic expansion.

In response, Bank of America raised its 2026 revenue estimates for Booking by 2% and nudged EPS higher. Post maintained a Buy rating but slightly trimmed his price target to $5,900.

Expedia Also Investing Aggressively In AI

Expedia's story is similar. The company also delivered a strong quarter. Fourth-quarter bookings of $27.0 billion and revenue of $3.5 billion both topped expectations. Adjusted EBITDA of $848 million beat consensus by a wide margin. Booked room nights grew 9% year over year, ahead of Street forecasts.

AI was a major topic on the earnings call. While management acknowledged potential traffic disruption risks, executives emphasized that Expedia's customer service, loyalty ecosystem, and deep supply of options remain difficult for a new AI player to replicate overnight.

Bank of America reiterated its Buy rating on Expedia and raised its price target to $306, citing improving execution and an attractive valuation.

A Rare Valuation Setup?

All this fear has created something unusual in the numbers: a giant gap between where the stocks are trading and where analysts think they should be. It's a disconnect you don't see very often.

According to market data:

• Booking's 12-month average target: $5,895
• Current price: $3,799
• Implied return potential: 55%

Only two other episodes in the past decade saw a higher implied return for Booking: March 2020 during the COVID-19 crash and the summer of 2022 amid the global energy crisis. We're talking panic-level discounts.

For Expedia:

• 12-month average target: $276
• Current price: $189
• Implied return potential: 48%

That's the highest potential return since a tariff-driven selloff back in April 2025.

Trap Or Opportunity?

So what's an investor to think? The market is clearly discounting a future where AI agents bypass Expedia and Booking altogether. It's a bet on disruption.

But these companies aren't exactly analog relics. They're massive, tech-heavy platforms with huge datasets, loyal customers, and billions to spend. Both are rolling out their own AI-driven tools, expanding loyalty ecosystems, and leveraging scale advantages that a startup—or a general-purpose AI—would struggle to match. The question isn't really "Will AI change travel booking?" It will. The question is whether Expedia and Booking become casualties of that change… or the leaders of it.

If history is any guide, moments of peak uncertainty—when the story is scariest but the fundamentals are still solid—have often marked compelling entry points. This time, the enemy isn't a virus or an oil shock. It's an algorithm. And the incumbents are writing a lot of code to fight back.