ABNB, COST & GO: AI Resilience, Younger Shoppers & a Value Comeback

Sam Vardis (0:01)

Welcome back to Market on Close. I'm Sam Vardis on the floor of the New York Stock Exchange alongside Marlee in Chicago. Let's take a look at a tree of stock picks to consider for your portfolio. Welcome in our next guest to do that, Chris Wang, Research Director at Runnymede Capital Management. Chris, good afternoon to you. So let's just cut to the chase and get to your three stock picks, starting with Airbnb, because as Marlee rightly pointed out, I mean, none of these are pure play AI stocks.

But in saying that, some of these companies have very much been leveraging AI to see productivity. We saw it in Airbnb's numbers. You say it's insulated from the AI agent threat, but for now, so when could it be threatened, do you think?

Chris Wang (0:42)

Yeah, great question. I think everybody's worried about what AI agents will do to online travel. And for parts of it, I think they should be. I think if you think about booking a flight, you tell an AI agent, you want to go to Chicago on Thursday, get me the cheapest price. And you don't really care too much whether it's Delta or United.

You just want to get there. I think same thing with rental cars. So in that space, the products are interchangeable. So the agent just hunts for the lowest price, and the middleman gets squeezed out. I think lodging is just a completely different animal. There's so many different variables. If you ask an AI agent to find you a $300 apartment, there's so many more questions and layers. What neighborhood? Is it quiet at night? Does it have a kitchen? What kind of beds are in that space? So two $300 listings could be wildly different experiences, and you can't really judge that from the price tag. So you want to see the photos, maybe read some reviews.

I think it's the same with hotels. So before people commit, they want to do that research themselves. Like I said, at least for now, maybe eventually the agent will be able to be trained to do that. But for now, Airbnb's cushion is that it has this advantage, and it's also bringing on a lot of hotel inventory. So they're making their search more easy for the end consumer to find the right place at the right price.

Marlee (2:09)

And Chris, I'm not sure if this comes into your thesis at all, but we talked to the team at Adobe Insights all the time and about AI shopping and its role in travel trends. One of the things that AI agents can't really do right now, specifically in travel, is a lot of these websites, hotel websites, airline websites, aren't readable by these agents. And the companies aren't pivoting fast enough. Whereas Airbnb, as you mentioned, people take the time to do that themselves. They want to see where they're staying. How much of that lack of readability across this industry is a part of your thesis for Airbnb in the near, and I guess the long term as well?

Chris Wang (2:48)

Yeah, I think that that makes a lot of sense to me. And I even had Metamuse try to do some searches for me in terms of just pet food. And I know it couldn't search out Amazon, it couldn't search out some other major resellers. I don't think a lot of these guys actually want you to see their prices. And it's going to be a question, can AI shop effectively and get you the right thing over the long term?

For now, I think there's a lot of different variables and like I said, in this lodging space, I think it's even more complicated. So I feel like that isolates Airbnb. I just did a search before coming on and I searched for hotels in New York. And actually three of the five first top five were hotels, surprisingly, and not apartments. So they're definitely changing their inventory and trying to make it more attractive to everyone.

Sam Vardis (3:41)

Well, I hope you come and join us here at the New York Stock Exchange, Chris. The other one on your list and on your radar is Costco because of a youth movement at the dad's store. Just unpack that one for us.

Chris Wang (3:54)

Yeah, sure. I mean, everyone's familiar with Costco. I mean, we all know that there's so many deals to be had at Costco, whether it's rotisserie chicken or the hot dog deal.

Everyone's familiar with that. And I think people picture it as a family shopping experience because, I mean, you're getting these mass quantities for a great price. But what surprised me about Costco, it does have a youth movement in its membership. So more than a quarter of its members are now under 40 years old. The generation that everyone assumes only shops on their phones. Costco has figured out how to meet them, where they're actually looking. So you can now get Costco same-day delivery on DoorDash, on Instacart, on Uber, and the app traffic is really surging. So they're not abandoning the warehouse. They're giving younger shoppers like that first taste of experience through apps, and then eventually you're going to walk into the store. And I think Costco is the defensive name that you want to own right now. Obviously with these AI concerns over the last week, is the AI trade going to unravel or rebound? And as you head into 2027, I think the comps are just going to be getting very tough when the S&P grew its earnings over 30%. Copying that comp is going to be tough. You're going to see a slowdown in earnings, and investors should look for a defensive part of the portfolio. Costco provides that. You even saw it last week when the Nasdaq dropped 2%.