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Airbnb (ABNB) shares climbed nearly 2.5% today, reflecting renewed investor interest as the stock continues to recover from its dip over the past 3 months. Recent trading momentum highlights shifting sentiment in the travel platform.

See our latest analysis for Airbnb.

Airbnb’s share price rebound this week follows several choppy months, with the stock still trailing its year-ago levels as shown by a 1-year total shareholder return of -7.7%. However, positive price action lately suggests market sentiment may be turning, as investors start focusing on the company’s long-term growth prospects.

If renewed momentum in travel platforms has you exploring fresh ideas, now is a great time to see what’s happening among fast-growing companies with strong insider backing via our fast growing stocks with high insider ownership.

But with Airbnb’s stock still trading about 10% below analyst price targets and a healthy gap to some estimates of intrinsic value, investors are left pondering whether this is the start of a bargain opportunity or if the market has already accounted for brighter days ahead.

The most widely discussed narrative on Airbnb puts its fair value well above the current share price, highlighting a major disconnect between the stock’s recovery and what long-term believers see as its true growth potential. According to TickerTickle, this valuation is anchored in big bets on the product evolution and future scale outside the US.

They have launched long-term rentals, made over 500 product improvements, and are going all in on AI to make the platform smoother. It is easier now to find the right stay without scrolling for 20 minutes.

Read the complete narrative.

Want to know why this fair value projection stands out? The hook is a turbocharged revenue mix and future margins that would put Airbnb in the top tier of consumer tech names. Only the full narrative reveals which aggressive forecasts are behind these sky-high expectations.

Result: Fair Value of $163.75 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, regulatory pressure in Europe and unresolved tax disputes in the US remain risks that could quickly alter the upside argument for Airbnb investors.

Find out about the key risks to this Airbnb narrative.

Looking from a market ratios perspective, Airbnb trades at a price-to-earnings ratio of 29.4x, which is higher than the US Hospitality industry average of 23.5x, but just below its peer group average of 31x. The fair ratio based on historical patterns comes in at 30.9x, indicating that the stock is actually near where the market could expect it to settle over time. This gap raises the question: are current expectations too high, or is there further room for upside if Airbnb outperforms?

See what the numbers say about this price — find out in our valuation breakdown.

If you want to challenge these views or follow your own research path, crafting your take on Airbnb’s story is easy and takes just a few minutes. Do it your way.

A great starting point for your Airbnb research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Don’t let your next big opportunity slip away. Take the lead and spot market-shifting winners with Simply Wall Street’s powerful stock screener tools.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ABNB.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Wall Street investors are underestimating artificial intelligence’s potential to make entire industries obsolete, Blackstone’s president has said, adding that the impact of the technology was now “top of our list” when evaluating deals.

Jonathan Gray said that understanding AI risks has become a priority for the private capital group when assessing investments, with the technology already upending business models and causing job losses.

“We’ve told our credit and equity teams: address AI on the first pages of your investment memos,” said Gray at the Financial Times Private Capital Summit in London this week.

High valuations of lossmaking AI companies, and the circular financial relationships between many key players, have fuelled concerns about a bubble in the sector.

Gray said investor exuberance meant it was inevitable that there would be some misallocation of capital to AI companies — “think of Pets.com in 2000”. But he added that the scale of the technology’s impact meant investors may still underestimate its potential to crush entire industries.

“People say, ‘This smells like a bubble,’” but they’re not asking: ‘What about legacy businesses that could be massively disrupted?’” said Gray.

“If you think about rules-based businesses — legal, accounting, transaction and claims processing — this is going to be profound,” he added.

Gray compared the looming disruption to New York City taxi licences, which grew almost 500-fold in value over many decades, before swiftly losing 80 per cent of their value when ride-hailing apps Uber and Lyft disrupted the market.

Gray said Blackstone had elevated AI risks to the “top of our list” when assessing the potential downside of investments.

“We’re spending enormous time on both new deals and, importantly, our existing portfolio: what does AI mean for enterprise software, for service businesses handling data and for rules-based work?” he added.

The rise of AI algorithms created by OpenAI, Microsoft and Google is already disrupting white-collar sectors such as accounting, consulting and law, and threatening business models of companies such as advertisers, publishers and software groups.

Machine -learning technology is also threatening manual jobs in areas such as manufacturing. 

Blackstone, an early and prolific investor in the data centres used by OpenAI and others to power large language models, has been assessing AI risks for years. It has recently decided not to buy some software and call-centre companies seen as vulnerable to AI-related risks, according to people briefed on the matter.

Blackstone has also invested heavily in utility companies that power data centres, even repositioning some of its industrial portfolio companies such as Copeland and Legence to sell products to providers of AI infrastructure.

Despite its evaluation of AI-related risks, some of Blackstone’s investments are exposed to the impact of technological change. Its private credit business has lent billions of dollars to enterprise software companies, including Medallia, that risk losing customers to AI-driven competitors.

Gray said that while AI would create some negative economic disruptions, the technology could also yield underestimated productivity benefits for large corporations and the global economy, creating trillions of dollars in new corporate wealth. So he has challenged dealmakers to also not miss AI-related opportunities.

“We’re forcing the conversation. We don’t claim to know exactly how it all plays out. But if every deal team has to analyse AI impact then it’s the number-one topic in the room,” he said. 

“Acting like it’s business as usual would be a mistake,” he added.