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The next AI winners may look nothing like Nvidia or Micron: One Big Investment Idea.
trade ideas :: 4hrs ago :: source - yahoo finance
By Jared Blikre
The next AI winners may look nothing like Nvidia (NVDA) or Micron (MU).
The first phase of the trade rewarded companies building the AI infrastructure, from chips to data centers. As the AI rally broadens, the next hunting ground may be businesses using those tools to cut costs, lift sales, or improve productivity.
The travel industry offers a good case study. Travel stocks took off broadly from their May lows, with airlines leading the first leg. Then the leadership changed.
Airbnb (ABNB), Booking Holdings (BKNG), and Expedia (EXPE) kept climbing into August while hotels stalled and airlines and cruises gave back part of their early surge.
The three booking platforms are up nearly 40% at the median since May 19. Hotels are roughly flat.
Yahoo Finance analysis of AlphaSpace data
The market move is a good reason to look more closely at what is changing inside these companies. One theme jumps out. AI is starting to show up in measurable business results, not just product demos.
There is no way to pin the stock-performance gap on AI alone. But Airbnb and Booking are already putting numbers around the payoff.
At Airbnb, nearly 45% of customer issues that begin with its AI assistant are resolved without a human, while customer support cost per booking has fallen roughly 16% from a year ago, with AI helping drive the improvement.
"AI is the best thing that ever happened to Airbnb," CEO Brian Chesky told Yahoo Finance.
Booking is seeing a similar payoff. Customer service cost per booking is falling at a double-digit rate, and management says its AI investments are already producing a positive return. Yet referrals from AI chatbots remain a tiny share of room nights.
In other words, the early payoff is happening inside the businesses themselves through customer service, search, personalization, and productivity.
But the stocks already surging may not be the most interesting ones.
Expedia, Booking and Airbnb have surged over 35% since mid-May as hotels are flat to down.·Yahoo Finance AlphaSpace
Choice Hotels (CHH) and Wyndham (WH) are beginning to report their own hard AI gains.
Choice says an AI-enabled sales tool lifted group-request conversion by 360 basis points, while an AI support pilot cut requests for operational help by about 40%.
Wyndham says its AI Concierge has boosted direct contribution by more than 500 basis points at participating hotels, while autonomous reservations are producing roughly 15% higher average daily rates than phone bookings.
Yet both stocks are down since May 19. Both trade around 15 times forward earnings, with operating margins above 25%. Analyst earnings estimates for both have fallen about 7% over the past three months.
That is where the setup gets interesting. The AI gains are appearing before either Wall Street's estimates or the shares have turned higher.
Airlines use AI too, but low margins and huge variables such as fuel and labor show why better technology alone does not automatically make a better investment.
So how do investors find the companies actually turning AI use into profits? That calls for a different kind of AI screen. Skip the buzzwords and start with the numbers — what is improving, whether the gains are big enough to reach profits, and whether Wall Street has already rewarded the stock.
How to find under-the-radar AI stocks
Test | What investors want to see | What doesn't count |
|---|---|---|
Proof | AI is clearly improving something important in the business | "We're embracing AI" |
Materiality | The gains are large enough to show up in profits or cash flow | A small pilot or anecdote |
Economics | The company can keep a meaningful share of those gains | Bigger forces overwhelm the benefit |
Expectations | Wall Street hasn't fully built the benefit into estimates yet | Estimates already surging |
Price | The stock hasn't already moved higher on the improvement | AI premium already embedded |
Travel is just one place to hunt. Insurance, banking, retail, restaurants, logistics, and healthcare services all have large amounts of repetitive service, pricing, paperwork, and transaction work.
That gives AI plenty of chances to save money, boost sales, or free employees for higher-value work — and gives investors plenty of numbers to watch.
Where else to look for under-the-radar AI winners
Industry | Where AI could show up in the numbers |
|---|---|
Insurance | Faster claims, better underwriting, lower service costs |
Banks & credit cards | Fraud detection, customer service, lending decisions |
Retail | Better recommendations, higher conversion, smarter inventory |
Restaurants | Ordering, staffing, promotions, lower labor costs |
Logistics | Better routing, higher utilization, fewer service costs |
Healthcare services | Scheduling, billing, paperwork, administrative labor |
The next leg of the AI trade may be less about who builds the technology and more about who turns it into better numbers before the stock catches up.
As Chesky told Yahoo Finance, "Everyone has access to AI, but not everyone's using it equally."
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
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