Navan's Strong Quarter Meets an AI Spending Reality Check

Navan shares fell over 15% after Q2 earnings despite 35% revenue growth, as investors worried rising AI spending could outpace future growth. The company also acquired BoomPop, an AI-powered event-planning platform, expanding its bundled travel, expense, and meetings offering without affecting guidance. Despite the sell-off, 17 analysts give NAVN a consensus Moderate Buy rating with a $30.50 price target, suggesting about 43% upside.

Navan Inc. NASDAQ: NAVN wouldn’t be the first company investors would think of as a target of the recent sell-off of artificial intelligence names. But that may be part of the trouble facing NAVN after the company’s Q2 earnings report for its 2027 fiscal year.

That’s because in the case of Navan, a slowdown in AI growth would directly contradict the company’s current growth initiatives. The company is significantly increasing its AI spending, but investors are worried that its growth won’t keep pace. Navan (formerly TripActions) is a corporate travel and expense management platform that bundles business travel booking, corporate cards, expense reporting, and now meetings and events into one AI-powered system. It competes against fragmented, legacy point solutions in that market, such as SAP Concur and American Express Global Business Travel (Amex GBT).

NAVN is down over 15% since the earnings report. That’s despite impressive headline numbers. Quarterly revenue was up 35% year over year (YOY) to $233 million. Perhaps more significantly, the company reported its third consecutive quarter of positive earnings on a non-GAAP basis. Both numbers exceeded analysts’ expectations. The company also raised its full-year guidance for both revenue (32% at the midpoint) and non-GAAP income (a 9% margin). That would normally be enough to push the stock higher, but that wasn’t the case. The concern is the execution of its AI strategy.

Navan reported that its AI support agent, Ava, handled roughly 60% of the company’s customer interactions in Q2. Plus, over 50% of Ava calls ran on Navan’s own models, up from 30% in Q1. But at what cost? Navan reported a 46% increase in operating expenses, which can be attributed to the company’s AI growth. That sets up the contradiction for investors. Navan is a growing company in a resilient sector. But that growth is being fueled by AI, which creates an execution risk. That execution risk got put into even sharper focus when the company announced an acquisition that adds another variable to the equation.

The same day Navan reported earnings, the company announced it had acquired BoomPop, an AI-powered platform for planning corporate meetings and events. Terms weren't disclosed. The deal wasn’t a surprise, which may explain the muted market reaction. Navan and BoomPop partnered earlier this year, and BoomPop's technology was already integrated into Navan's events offering before the acquisition made the relationship permanent. It's a pattern the company has used before, most recently with its Smartrips deal in Latin America: partner first, prove out demand, then buy and fully integrate. BoomPop brings a track record that fits Navan's consolidation pitch. The company says it has supported events for roughly 250,000 people at customers, including Accenture NYSE: ACN, Amazon NASDAQ: AMZN, Alphabet NASDAQ: GOOGL, Salesforce NYSE: CRM, and Shopify NASDAQ: SHOP, and estimates it has cut customers' event-booki...