Episode summary
Meta, Adobe, & Booking Holdings | Stock Analysis & Valuation (TIP825)
We Study Billionaires
· · Hosts: Stig Brodersen, Tobias Carlisle, Hari Ramachandra
Summary
The discussion centered on three companies exposed to AI in very different ways: Meta, Booking Holdings, and Adobe. One guest argued that Meta remains a world-class advertising machine, with strong network effects, rising ad revenue, and operating leverage, but the market is worried about its massive AI infrastructure spending and whether that capital will earn acceptable returns. The other panelists agreed that Meta’s upside depends on AI monetization and that the main risk is a long period of under-earning while spending catches up to demand.
Booking Holdings was framed as a high-quality, capital-light travel platform that has historically compounded well and still looks reasonably valued after a selloff. The main debate was whether LLMs become a distribution threat or a new channel for Booking. One guest argued the company could either be disintermediated or become the backend layer inside AI travel agents, while the others emphasized that the discount already reflects some of that uncertainty.
Adobe drew the most nuanced debate: the host emphasized its subscription base, switching costs, and entrenched role in professional creative workflows, while also admitting that AI could hurt the top of the funnel and lower-end creative tools. The counterpoint was that AI may strengthen Adobe by handling first-draft generation while Adobe remains the tool for precision editing and production-ready work.
Key takeaways
- A guest sees Meta as a high-quality ad business with 2026 ad revenue of $243 billion, but worries about whether $135 billion of projected AI capex will earn enough back.
- The panel agreed Meta’s biggest risk is not collapse, but years of under-earning if AI spending outruns monetization and chips age faster than infrastructure.
- Booking Holdings was described as capital-light, high-ROIC, and potentially undervalued, with the bear case centered on LLMs disintermediating travel booking.
- The host argued Booking could still benefit if LLMs route users through Booking as a backend channel instead of replacing it.
- Adobe was presented as sticky and workflow-critical, with 96% of $23 billion in revenue from subscriptions and strong switching costs.
- The main Adobe debate was whether AI mostly hurts the funnel and commoditizes creation, or whether Adobe remains the premium tool for production-ready editing.
Notable quotes
“they are on track to beat Google in terms of ad revenues. Their forecasted ad revenue for 2026 is $243 billion”
“they've all got this massive CapEx to chase this opportunity. And it's just not clear how they monetize that into the future”
“The big risk to Booking is that folks think that they can somehow they will figure out how to get AI to control”
“the creative control that's where Adobe shines. And she was saying the same thing as you, like it can generate things”
How the episode opens
(00:00) One of the things that I can't help but think about for many of the stocks in my own portfolio is what happens if computing becomes essentially free. And I know it sounds a bit odd to have that framework. It's a bit like for a lot of companies you have this thesis for the longest time.
(00:17) What happens if we figure out how to make abundant energy for example like and then all energy is free then you know we have clean drinking water for the entire world because we need so much energy but now it's free.
Welcome to The Investors Podcast. I'm your host Stig Brodersen and today I'm here with Tobias Harry. (00:38) Gents, how are you today? — I'm well Stig, good to see you. Good to see Harry. — Hey Stig and Toby. Hello from India. Good to see you both.
Good to see you and Harry, you have a very intriguing pick so let's just jump right into it and take it away.
Awesome. My pick for this time is Meta. When I was looking at the recent shuffle in the market I see many names falling down and Meta was one of them.
(01:06) Its share price from its peak has fallen down by 20%. And when I looked at the company, the business is pretty strong. They're one of the two best advertising machines ever built.
In fact, they are on track to beat Google in terms of ad revenues. Their forecasted ad revenue for 2026 is $243 billion which will be $3 billion more than Google's revenue and they're growing their operating margin is very healthy at 41% with a $46 billion free cash flow in 2025. (01:47) A 30% net margin.
Their revenue has been growing pretty healthily for last 5 years with a 18.5% CAGR revenue growth.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai moats
- meta monetization
- ai infrastructure spending
- travel booking competition
- adobe switching costs
Companies and tickers mentioned
- META
- ADBE
- BKNG
- Meta
- Adobe
- Booking Holdings
Watch the episode
Watch “Meta, Adobe, & Booking Holdings | Stock Analysis & Valuation (TIP825)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from We Study Billionaires
-
S&P Global (SPGI), Novo Nordisk (NVO), Deckers (DECK) | Stock Analysis & Valuation (TIP857) -
Financial Independence Isn't Luck | w/ David Fagan and Stig Brodersen (TIP849) -
How to Live Off Your Portfolio | Ian Cassel, Author of Stock Picker (TIP846) -
Lyn Alden on How Fiscal Dominance Reshapes Markets (TIP815) -
Mohnish Pabrai: Berkshire, Big Mistakes & Letting Winners Run (TIP812) -
Is Berkshire Hathaway Undervalued Right Now? (Chris Bloomstran Explains) (TIP810)
We Study Billionaires, this episode and its artwork belong to The Investor's Podcast Network. Octagon is not affiliated with the show; this page is an independent summary.
