AI is starting to help Booking's business. Its stock should benefit

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Booking Holdings' third-quarter earnings report offered fresh evidence that artificial intelligence could become a growth driver rather than the disruptive threat investors have feared, reinforcing CNBC's view that shares are a good value at current levels.

Earnings beat fuels a rally

While stocks broadly rallied following Tuesday's elections, Booking outperformed the market, rising 9.8%. The company had its own catalyst: Third-quarter results exceeded the high end of management's guidance across key metrics, demonstrating resilient travel demand despite geopolitical uncertainty.

Booking reported 7% growth in room nights and 10% growth in gross bookings to $54.5 billion from the third quarter of 2025. Adjusted earnings per share rose 17% to $4.66, ahead of Wall Street's expectations of $4.49, according to FactSet.

Revenue declined 1% to $8.9 billion, reflecting a $900 million reduction tied to a Federal Trade Commission matter involving Priceline. Excluding that adjustment, adjusted revenue grew 9% to $9.8 billion.

AI is delivering early commercial benefits

But perhaps the most important development for our Booking thesis is emerging evidence that AI could improve Booking's existing business rather than simply threaten its distribution.

In a CNBC interview Wednesday, CEO Glenn Fogel described AI as a "big positive" for Booking, reinforcing management's optimism about the technology.

Tuesday's earnings call offered some of the clearest evidence yet of its potential benefits. Management said users of Priceline's Penny and Agoda's AI assistants converted at approximately twice the rate of non-users, while Agoda's AI-assistant users generated average booking values roughly 20% higher. Booking.com's daily AI trip-search visitors also increased tenfold from the second quarter.

These early indicators suggest AI could improve conversion rates and booking values, although the company has not quantified the incremental earnings contribution.

Importantly, referrals from external AI platforms such as ChatGPT still account for significantly less than 1% of Booking.com's room nights. That distinction matters: AI is showing promising commercial results within Booking's own platforms, even before third-party agents become a meaningful source of bookings.

AI: From disruption to integration

Booking is also expanding its presence on third-party AI platforms. On Oct. 28, Agoda, its Southeast Asian online travel agency, announced an integration with Meta's Muse AI agent, allowing travelers in Singapore and Japan to discover destinations, book hotels and manage itineraries.

Meanwhile, OpenTable's integration with OpenAI accounted for 190,000 seated covers in September, illustrating how agentic platforms could become new distribution channels. Seated covers count the number of guests using reservations.

These developments reinforce CNBC's original thesis: While investors fear AI agents could bypass online travel intermediaries, Booking's extensive accommodation inventory, payments infrastructure and supplier relationships could make it an essential partner for those platforms.

There is a fundamental distinction between planning trips and completing bookings. AI agents can recommend hotels, but fulfilling reservations requires live inventory, payment processing and customer service. Booking already has that infrastructure, with approximately 4.7 million properties across more than 220 countries and territories.

Crucially, the feared disruption has yet to materially affect Booking's core business. Direct channels continue to account for a mid-60% share of business-to-consumer room nights.

The marketplace also continues to strengthen. Alternative accommodation room nights grew 7% in the third quarter, accelerating from 4% in the preceding quarter, while listings increased about 9% year over year.

Risks remain, including geopolitical disruptions, that could slow fourth-quarter room-night growth. Also, a FTC complaint regarding Priceline's relationship with third-party website Guest Reservations hasn't been fully resolved. Until it is, there is a possibility of further penalties. But the results reinforce the potential disconnect between Booking's valuation and its underlying performance.

Since CNBC first recommended the stock in September, shares have fallen 1.7% through Wednesday's close, but the thesis that investors were overestimating AI disruption while undervaluing Booking's competitive advantages remains intact. The latest results strengthen that argument: The core business remains resilient, while AI is beginning to demonstrate measurable commercial benefits, potentially becoming a tailwind rather than a headwind for long-term growth.

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