By Teresa Rivas

With much of the country in a deep freeze in the past month, plenty of people are likely thinking of getting away on a tropical vacation. Yet it's been anything but a day at the beach for online travel agencies, whose stocks have been caught up, once again, in the latest artificial-intelligence fears.

AI's rapid developments have led to broad-based selling this week, as investors fear it will replace many service-based industries, from software to customer service to legal consulting. As a result, companies that make physical things have been in favor instead. Online travel agencies, or OTAs, like Priceline owner Booking.com and Expedia have been hit hard, with their shares both down around 13% this week.

This seems like an overreaction. After all, it's not the first time that AI fears have clobbered the stocks, and they've always rebounded, as travel demand remains robust.

Baird analyst Michael Bellisario added both companies to his firm's fresh bullish picks on Friday, reiterating Outperform ratings on both. He has a price target of $6,325 on Booking and$280 on Expedia.

Bellisario notes that OTAs' shares previously sold off in both January and November of last year, and each of those drops proved to be good opportunities to buy the stocks. He says this time around will be similar, and notes some of the benefits for the industry from AI.

"Potential revenue impacts are further out than investors are pricing in currently, and AI implementation is improving the OTAs' marketing efficiency and overall expense structure (headcount reductions) and profitability, which should be reflected in the companies' 2026 outlook, " he writes.

OTAs are benefiting from robust ongoing travel demand, as fourth-quarter booking trends demonstrated. That should continue, as Barron's highlights, given a good setup for 2026. World Cup travel and key holidays landing near weekends should spur further demand.

Bellisario says Booking and Expedia also have their coming earnings reports to serve as positive catalysts. He estimates Expedia will beat expectations with earnings per share of $3.40 on revenue of $3.45 billion when it posts fourth-quarter results next week. Booking reports the following week after and he's also expecting a beat, with EPS of $49.43 on revenue of $6.14 billion.

Moreover, he says most of the AI turmoil may already be in the rearview mirror: "If history repeats itself, the majority of the AI-related pullback likely has occurred already over the last few days, and the setup for relative outperformance is favorable, especially with earnings on the horizon."

Expedia has outperformed since Barron's recommended the shares last fall, citing travel trends and its strong track record.

Getting out of town never goes out of style. The same is true of OTA stocks.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 06, 2026 14:50 ET (19:50 GMT)

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