2 Intriguing Internet Stocks to Buy Now: TRVG, UPWK

In the dynamic world of internet stocks, two companies—trivago Group (TRVG) and Upwork Inc. (UPWK)—are carving out distinct paths amid economic headwinds and technological innovation. Both have shown resilience in their Q1 2025 results, but their strategies and risks diverge significantly. Let’s dissect their prospects and determine which could be a better buy today.

trivago Group (TRVG): Betting on AI and Global Expansion

trivago’s Q1 2025 revenue surged 22% year-over-year to €124.1 million, fueled by robust performance in Rest of the World (RoW) and Developed Europe. However, the company reported a net loss of €7.8 million, with operational expenses rising sharply due to aggressive marketing investments. Key highlights include:
- AI-Driven Growth: Expanded AI features like hotel filtering and multilingual highlights now serve 350,000 hotels, while its partnership with Holisto (an AI-driven conversion tool) has improved user engagement. The Holisto acquisition’s full integration by mid-2025 promises to enhance profitability.
- Regional Disparities: While ROAS improved in Developed Europe (134%), it dropped in the Americas (102.7%) and RoW (120.3%), signaling uneven returns on ad spending.

Why Buy TRVG?
- Long-Term AI Play: trivago’s pivot to AI could solidify its position as a global travel search leader, especially with Holisto’s data-driven tools.
- Balance Sheet Strength: €118.6 million in cash and zero long-term debt provide flexibility for reinvestment.

Risks:
- Marketing costs remain a drag. If RoW and Americas ROAS continue to lag, profitability could suffer.
- The Holisto acquisition’s full impact is unproven, and guidance excludes its benefits, adding uncertainty.

Upwork (UPWK): Monetizing the Freelance Economy

Upwork delivered record Q1 2025 results, with revenue hitting $192.7 million and adjusted EBITDA surging 68% to $56 million. Its AI platform, Uma, is driving engagement, while its premium Business Plus plan is attracting large enterprises. Key takeaways:
- AI-Driven Monetization: Uma’s Proposal Writer and homepage integrations boosted user interaction by 58% and 340%, respectively. AI-related work now commands a 40% premium, with GSV in this segment up 25% year-over-year.
- Enterprise Shift: Business Plus clients more than doubled quarter-over-quarter, with 37% of new users being first-timers. Managed services revenue grew 3%, signaling enterprise traction.

Why Buy UPWK?
- Profitability Goldmine: A 29% adjusted EBITDA margin and $30.8 million in free cash flow highlight operational excellence.
- Cash Reserves: $622 million in cash provide a cushion for buybacks or acquisitions.

Risks:
- Active client count fell 7% year-over-year due to macroeconomic pressures.
- Margins may dip temporarily as the company invests in AI and enterprise sales.

Stock Performance Comparison

While TRVG’s stock has been volatile—up 10% in April but down 5% in May—UPWK surged 10.7% post-Q1 results, reflecting investor confidence in its margin resilience.

Conclusion: Which Is the Better Buy?

Both TRVG and UPWK offer compelling opportunities but cater to different risk appetites.

TRVG (TRVG) is a high-risk, high-reward bet. Its AI and Holisto strategy could unlock long-term growth, but near-term profitability hinges on stabilizing ROAS and controlling costs. Investors should consider its valuation: a P/E of 30.48 suggests growth optimism, but its net loss and cash burn remain concerns.

UPWK (UPWK) is a lower-risk growth stock. Its record margins, cash reserves, and AI-driven monetization give it a stronger near-term footing. While active client declines are worrisome, its premium enterprise focus and 29% EBITDA margin make it a safer pick.

Final Recommendation:
- Aggressive Investors: Buy TRVG for its AI-driven disruption potential. Monitor its Q2 results to see if ROAS improves post-Holisto integration.
- Conservative Investors: Opt for UPWK’s proven profitability and cash flow. Its valuation (P/E 8.47) appears undervalued given its free cash flow and AI tailwinds.

Both stocks warrant a closer look, but UPWK’s margin resilience and cash strength make it the more compelling buy today.

Data as of May 2025. Past performance does not guarantee future results.