Why Cheap Stocks Like Booking Holdings Are Trading at Exceptional Value Right Now

When companies announce share splits, history shows the market often rewards this decision. Since the start of the 2010s, equities experiencing split announcements have delivered approximately 18.3% returns over the subsequent twelve months, compared to just 13.3% for the broad market index, based on research from Bank of America, Bloomberg, and Global Financial Data. Yet one major travel-tech company has bucked this trend entirely.

Booking Holdings (NASDAQ: BKNG) announced a 25-to-1 share division in mid-February, yet its stock price has declined roughly 5% since that announcement. This represents a puzzling disconnect—and potentially a significant opportunity for value-focused investors seeking cheap stocks to buy now. The culprit? Overwhelming concern about artificial intelligence disruption.

Why AI Fears Have Created an Unfair Market Discount

Travel-focused artificial intelligence tools have understandably spooked some investors. The prospect of AI-powered chatbots that can instantly plan vacations, book hotels, arrange transportation, and handle translations raises legitimate questions about whether traditional travel platforms will become obsolete.

However, this concern significantly overestimates AI’s capability to replicate what Booking has built over decades. The company maintains a formidable network spanning 4.4 million properties across 220 different countries as of late 2025. This ecosystem includes countless boutique hotels and independent vacation rental operators that depend on Booking’s platform for distribution and operational management. Constructing a comparable network would require years of painstaking work to onboard and configure new listings.

Beyond accommodations, Booking continues expanding into complementary services—flights, car rentals, ground transportation, guided tours, and activities all flow through its platform. The company’s OpenTable subsidiary operates a separate network for restaurant reservations primarily across North America. These diverse offerings converge through the Connected Trip initiative, which seeks to unite every component of a traveler’s journey within a single ecosystem.

A Structural Competitive Edge the Market Underestimates

What truly distinguishes Booking isn’t just supply-side scale—it’s proprietary data. The company possesses decades of accumulated customer information, continuously supplemented by property operators sharing booking patterns and guest feedback. This first-party data advantage allows Booking to develop AI tools that are fundamentally superior to generic travel assistants built without access to such rich information.

Connected Trip transactions—where customers book multiple trip components through Booking’s platforms—surged in the high 20% percentage range during 2025. This metric demonstrates expanding customer switching costs and increasingly seamless horizontal integration. As AI technology matures and competition intensifies, such operational stickiness becomes an invaluable moat.

Booking has already begun integrating generative AI into its platform, rolling out natural-language search capabilities for trip discovery and planning. These efforts remain early-stage but represent a genuine competitive response rather than a vulnerability.

Financial Reality Contradicts Market Pessimism

Setting aside AI anxiety, Booking’s actual business performance has been remarkably robust. The company grew annual revenue by 13% throughout 2025, propelled by an 8% expansion in booked room nights. Critically, a cost-cutting initiative launched in November 2024 is driving substantial margin expansion, with bottom-line earnings jumping 20% for the year.

The company deployed surplus capital toward share repurchases, amplifying earnings-per-share growth to 22%—significantly outpacing revenue expansion. Management projects these cost efficiencies will persist through 2026, though the company intends to reinvest substantial savings into strategic priorities including generative AI development, Connected Trip expansion, Asian market penetration, and international OpenTable growth.

Despite these investments, management expects EBITDA margins (a key profitability metric) to expand by approximately 50 basis points during 2026. Combined with ongoing core business momentum—double-digit gross booking growth remains intact—Booking should sustain comparable revenue expansion.

Trading at Valuations That Demand Extreme Pessimism

The market’s current pricing of Booking stock essentially assumes an earnings collapse scenario. The forward price-to-earnings ratio hovers near 14x—genuinely inexpensive by any reasonable standard. Management’s guidance of 15% earnings-per-share growth would need to deteriorate catastrophically to justify this valuation.

Even if competitors successfully launch competitive travel AI tools, Booking’s structural advantages—unmatched data depth, entrenched supply networks, strong brand recognition—should shield it from meaningful earnings deterioration. The company’s forward price-to-earnings-to-growth ratio (PEG ratio), standing below 1.0, signals exceptional long-term value.

The Case for Adding to Positions Now

Current conditions present a compelling moment to consider cheap stocks in the technology-enabled travel space. Booking represents exactly this profile: a high-quality business generating strong financial returns, guided by experienced management, trading at valuations that leave enormous margin for error.

The share split announcement combined with the broader market uncertainty has created temporary inefficiency. History suggests such moments typically reward patient, rational investors who recognize the gap between temporary fear and underlying business quality. For those seeking exposure to secular travel trends coupled with genuine artificial intelligence integration, Booking’s current valuation warrants serious consideration.