Shortly after recovering from any lingering New Year's hangovers, investors this January were hit with another headache: the so-called SaaSpocalypse, when concerns about artificial intelligence led software stocks to drop. Amadeus, a provider of specialized software to the airline and hospitality industry, was no exception. Now, after recovering 23% from its post-AI turbulence, the stock is set up for further gains.

The Madrid-based company has grown revenue 5% in constant currency in the first half of 2026, to 3.3 billion euros, compared with the same period last year. ("Constant currency" converts foreign currencies in the current year at the prior year's exchange rates, providing investors with comparable measurements by smoothing out foreign exchange fluctuations). Adjusted diluted earnings per share soared 7.3% at annualized constant currency levels, to EUR1.75. This in the face of threats from the U.S. war against Iran, rising energy prices, and the International Air Transport Association cutting its 2026 global passenger traffic forecast.

The company's diversified revenue stream across its Air Distribution, Hospitality, and Air IT Solutions segments; its acquisition of Idemia Public Security; and the launch of a travel advertising platform could propel Amadeus' stock skyward by 40% above current levels.

"Travel inventory is the most perishable," says Sergei Pliutsinski, consumer analyst at Harding Loevner, which holds four million shares of Amadeus, worth about $257 million. "Seats not sold today vanish forever. Airlines must fill them-and need a system that will do this reliably." Adds Anthony Hene, portfolio manager at GMO Asset Management: "No airline can build a system with the same capabilities at a sensible price, so client loyalty tends to be strong."

The Air Distribution segment distributes pricing, seating, and booking information across multiple platforms, processing 100,000 transactions per second. Its search functionality is on par with Google's, with about 2.8 billion search queries a day. The slower pace of bookings in the first half of 2026 didn't delay the arrival of increased revenue per booking, which landed at 5.1% year-over-year growth in constant currency. GOL Linhas Aéreas, flydubai, and FitsAir were among airline clients expanding their distribution with Amadeus during the first half of 2026, while Kanoo Travel, ITL World, and Tourvest came onboard with new travel seller agreements.

"Hosting customer data and managing transactions give Amadeus insight into areas that need improvement," says Iain McNaught, Global Equity Analyst for Morgan Stanley Investment Management, which owns the stock. "New entrants struggle in an industry with low tolerance for error, and conservatism driven by stringent regulation and a safety-first culture."

Amadeus also facilitates bookings for hotels. Travelers helped hike Amadeus' hospitality revenue by 9.2% in the first half of 2026 in constant currency over the same period last year, to EUR543 million. New business relationships include 1,700 Marriott International properties, Primestar, Caribbean Tourism, and JUFA Hotels.

The company's relationship with travelers continues at the airport, where they may use self-service kiosks to receive boarding passes, check baggage, and pass through security. Amadeus saw 8.7% Y/Y revenue growth in its Air IT Solutions segment in the first half of 2026, to EUR1.2 billion in constant currency. Scandinavian Airlines, British Airways, and Lisbon Airport were among this segment's new relationships in the first six months of this year.

Amadeus' EUR1.2 billion cash acquisition of Idemia Public Security, a biometrics security company, is expected to close mid-2027. Forecast to provide EUR50 million in cost synergies, it will be immediately accretive to earnings per share and contribute about EUR800 million in revenue. IPS increases Amadeus' exposure to the total addressable biometrics market to EUR50 billion.

"When software companies were considered worthless because of AI, Amadeus made a countercyclical acquisition," says Sujo Akoni, investment manager for Edinburgh, Scotland-based Baillie Gifford, which holds shares. "It was the right time to do it."

In May, the company launched the Amadeus Travel Advertising Platform, a partnership with Accenture to supply hotels, airlines, and destinations with customer travel demand data gleaned from Amadeus' travel data and other sources. Such forward-looking travel data will enable travel brands to design more-accurate advertising decisions. "This allows them to get the best possible business performance from their data using AI tools," says Morgan Stanley Investment Management's McNaught. "It's very early in implementation and seems generally well received so far."

Should the wars in Iran and Ukraine escalate beyond current levels, energy prices and flight reductions could crimp Amadeus' results. Similarly, as-yet-unknown technologies or airlines undertaking their own information-technology endeavors and increasing their direct-to-consumer channels could also interrupt its five-year compounded annual growth rate of 18%.

Amadeus has about one times net debt to earnings before interest, taxes depreciation, and amortization, or Ebitda-less than the 7.5 times of its competitor Sabre. Shares offer a free-cash-flow yield of 8.4% and a dividend yield of 2%. The stock trades at 16 times forward EPS, below the 21 times for which it traded a year ago. A discounted cash flow valuation with a terminal value of $31.5 billion, a working average cost of capital of 7.94%, and flat free-cash-flow growth results in a target price of $111. A return to last summer's multiple, layered over a conservative estimated 2026 $3.70 EPS, results in a target price of $77. The average of these methods yields a 12-month target of $94-about 40% above current levels.

Investors should book their next journey with Amadeus.

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