Pershing Square Challenge 2026 finalists pitch Amadeus $AMS | the toll booth on global travel
Speakers
Kabir
— Pershing Square Challenge finalist
Ethan
— Pershing Square Challenge finalist
Andrew Walker
— Host, Yet Another Value Blog
Fran
— Pershing Square Challenge finalist
Summary
Team Amadeus, a Pershing Square Challenge finalist, presents a long thesis on Amadeus ($AMS). They argue the market has wrongly lumped Amadeus with AI-vulnerable SaaS, while its mission-critical airline IT and distribution businesses are deterministic, high-switching-cost assets that AI cannot easily displace. They also see valuation support from 15x earnings, 15% EPS growth, and potential AI productivity benefits, while viewing Sabre as overlevered and underinvested.
- Andrew Walker hosts Team Amadeus from the Pershing Square Challenge.
- Team describes Amadeus as the toll booth on global travel with three segments and roughly 50% share in core markets.
- AI disintermediation fears have compressed the stock to about 15x earnings despite mission-critical, deterministic systems.
- Air IT is compared to the SAP of airlines, with high switching costs and only about 1% of airline revenue.
- GDS network effects, LLM cost/uptime limitations, and Google's retreat support the distribution moat.
- Team sees 15% EPS growth, about a 3% dividend, and fair value near 22x earnings even without a rerating.
- Sabre is described as overlevered, PE-owned, underinvested, and losing share to Amadeus.
- AI could be a productivity tailwind through engineering efficiency and margin expansion.
Ideas
AI-proof travel monopoly trading too cheaply
Amadeus is the toll booth on global travel: it is the #1 player with roughly 50% share in its core segments, connecting 400+ airlines to travel sellers and running mission-critical airline IT systems that handle check-in, boarding, luggage, and takeoff. AI disintermediation fears have compressed the stock to about 15x P/E, but the businesses are deterministic, high-switching-cost systems of record, not per-seat AI-vulnerable SaaS. Air IT is only ~1% of airline revenue but if it fails planes cannot fly; the GDS has network effects, only three players, and is a poor fit for LLMs due to 30x inference cost, 99.3% LLM uptime versus 99.99% airline requirements, and restricted web scraping. Sabre's share losses reinforce Amadeus's moat. With 15% expected EPS growth, ~3% dividend yield, and fair value around 22x earnings, the stock can deliver ~20% returns without multiple rerating.
Overlevered Sabre keeps losing share to Amadeus
Sabre is the #2 player but is overlevered at roughly 9x, has been private-equity owned, and underinvested in its product. That prevented it from matching Amadeus's COVID-era payment-term/content deals or funding customer implementations, so it lost share to Amadeus's compounding network effects. Its higher revenue per employee likely reflects a barebones, underinvested product rather than a durable advantage, leaving Sabre at risk of continued share loss.
AI productivity can expand Amadeus margins
AI is likely a tailwind rather than a threat for Amadeus because it can improve engineering productivity: Amadeus has more engineers than Microsoft Office and Outlook combined, and experts expect 1.5x to 10x productivity gains. Even at the low end of 1.5x, earnings could grow by about 10%. Sabre's 30% higher revenue per employee suggests Amadeus has room to improve, so AI can expand margins.
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