Jefferies Upgrades Expedia to Buy, Sees 33% Upside on AI
The analyst firm raised its rating from Hold, citing AI-driven improvements in recommendation engines and customer acquisition costs.
Jefferies upgraded Expedia Group to Buy from Hold on Monday, slapping a $300 price target on the online travel giant and calling it an underappreciated AI beneficiary.
The stock closed at $226, putting Jefferies' target at roughly 33% upside. Expedia shares jumped 4.2% on the news, one of the few bright spots in a market still digesting geopolitical uncertainty.
Analyst John Colantuoni laid out the bull case in a research note that reads more like a tech thesis than traditional travel coverage.
The AI Angle
Colantuoni argues that AI will transform Expedia's economics in four specific ways:
Better recommendations — Machine learning models that understand user preferences can improve conversion rates on hotel and flight searches. Expedia has been investing heavily in this area, and early results show travelers booking higher-value packages when recommendations are personalized.
Lower customer acquisition costs — Travel is notoriously competitive for online advertising. Google, Meta, and TikTok extract billions from OTAs fighting for clicks. AI-driven marketing that targets the right users at the right time can reduce that spend without sacrificing volume.
Faster product velocity — Generative AI tools let engineering teams ship features faster. Expedia has been using coding assistants internally for over a year. The productivity gains compound over time.
Reduced customer service costs — Chatbots powered by large language models can handle routine inquiries—rebooking, cancellations, itinerary changes—that previously required human agents. The cost savings flow straight to the bottom line.
The Numbers
Jefferies' analysis supports continued high single-digit percentage lodging bookings growth and 100-plus basis points of annual EBITDA margin expansion. Combined with aggressive share repurchases, that translates to 20%-plus EPS growth over the next three years.
The firm isn't alone in seeing upside. Morgan Stanley raised its price target to $290 last week, and the street consensus sits at $255. But Jefferies' $300 target is among the highest on Wall Street.
Instacart got a similar upgrade on Monday, with Jefferies raising its Maplebear target from $38 to $45 and upgrading from Hold to Buy. The common thread: companies where AI improves unit economics in ways the market hasn't fully priced.
The Risks
Expedia isn't a pure AI play. It's still a travel company, and travel is cyclical. The Iran conflict has already dented international bookings. If oil prices stay elevated and consumers pull back on discretionary spending, AI improvements won't matter as much.
The company also faces structural competition from Google, which continues to build out its own travel search features. Every time Google adds hotel prices directly to search results, OTAs lose leverage.
And then there's valuation. Expedia trades at roughly 12x forward earnings—cheap for a tech-adjacent business, but the market may be pricing in legitimate concerns about the consumer environment.
Context Matters
Expedia is down about 30% from its 2026 highs, victim of the same rotation that has punished growth stocks across the market. The Nasdaq correction hit travel names particularly hard as traders fled anything tied to discretionary spending.
Jefferies is essentially arguing that the selloff has created an opportunity. AI benefits are real but underappreciated. The balance sheet is strong. Buybacks provide a floor.
It's a contrarian call at a time when most investors are focused on oil prices and recession odds. Whether it pays depends on whether the Iran crisis resolves before consumer confidence cracks.
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