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DKNG's AI Push Takes Shape: Can Automation Power Its Next Margin Cycle?
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Key Takeaways
DKNG is intensifying AI investment, while mature OSB and iGaming markets see lower incremental spend.
DraftKings expects AI to deliver cost reductions next year and a longer tail of efficiency gains.
DKNG views automation as a multiyear driver that can improve leverage and support long-term profitability.
DraftKings Inc. (DKNG - Free Report) is sharpening its focus on artificial intelligence (AI) as one of the few areas where incremental investment will increase heading into 2026. In the third quarter of 2025, management emphasized that while most of the company’s core OSB and iGaming footprint will require little to no additional spending next year, AI stands out as a meaningful exception. DraftKings positioned AI as a strategic priority that can both reduce near-term costs and unlock longer-term efficiency and revenue benefits.
The company stated that AI is expected to begin generating cost reductions as early as next year. Some benefits are anticipated to contribute directly to 2026, while others will take longer to materialize, forming what DKNG described as a “longer tail” of operational and commercial improvements.
This renewed technology focus comes at a time when DraftKings is taking a more disciplined approach to spending in its established business lines. Management noted that in more mature OSB and iGaming states, incremental investment may even decline in 2026, allowing resources to shift toward initiatives such as AI that can drive structural efficiency gains. While the company will continue investing in newer state launches and in building its predictions offering, AI remains a distinct category with multiyear importance to the operating model.
DraftKings also framed AI as a potential contributor to its long-term profitability trajectory. Although the financial impact has not been quantified, management highlighted AI’s ability to reshape cost dynamics over time and improve operating leverage as the business scales. With more measured spending across the rest of the organization, DraftKings’ increasing emphasis on automation and data-driven systems signals that AI could form the foundation of the company’s next margin cycle.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have declined 30.8% in the past three months compared with the industry’s fall of 10.4%. In the same time frame, other industry players like Accel Entertainment, Inc. (ACEL - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) and Boyd Gaming Corporation (BYD - Free Report) have declined 10.2%, 8.9% and 2.7%, respectively.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.30, below the industry average of 2.71. Conversely, industry players, such as Accel Entertainment, Melco Resorts and Boyd Gaming, have P/S ratios of 0.62X, 0.72X and 1.69X, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has been revised downward, decreasing from $2.06 to $1.54 over the past 30 days.
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 100.4% surge in 2026. Conversely, industry players like Accel Entertainment and Boyd Gaming are likely to witness a rise of 13.4% and 7.1%, respectively, year over year in 2026 earnings. Meanwhile, Melco Resorts’ earnings are likely to increase 44.1% year over year in 2026.
Image: Shutterstock
DKNG's AI Push Takes Shape: Can Automation Power Its Next Margin Cycle?
Key Takeaways
DraftKings Inc. (DKNG - Free Report) is sharpening its focus on artificial intelligence (AI) as one of the few areas where incremental investment will increase heading into 2026. In the third quarter of 2025, management emphasized that while most of the company’s core OSB and iGaming footprint will require little to no additional spending next year, AI stands out as a meaningful exception. DraftKings positioned AI as a strategic priority that can both reduce near-term costs and unlock longer-term efficiency and revenue benefits.
The company stated that AI is expected to begin generating cost reductions as early as next year. Some benefits are anticipated to contribute directly to 2026, while others will take longer to materialize, forming what DKNG described as a “longer tail” of operational and commercial improvements.
This renewed technology focus comes at a time when DraftKings is taking a more disciplined approach to spending in its established business lines. Management noted that in more mature OSB and iGaming states, incremental investment may even decline in 2026, allowing resources to shift toward initiatives such as AI that can drive structural efficiency gains. While the company will continue investing in newer state launches and in building its predictions offering, AI remains a distinct category with multiyear importance to the operating model.
DraftKings also framed AI as a potential contributor to its long-term profitability trajectory. Although the financial impact has not been quantified, management highlighted AI’s ability to reshape cost dynamics over time and improve operating leverage as the business scales. With more measured spending across the rest of the organization, DraftKings’ increasing emphasis on automation and data-driven systems signals that AI could form the foundation of the company’s next margin cycle.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have declined 30.8% in the past three months compared with the industry’s fall of 10.4%. In the same time frame, other industry players like Accel Entertainment, Inc. (ACEL - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) and Boyd Gaming Corporation (BYD - Free Report) have declined 10.2%, 8.9% and 2.7%, respectively.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.30, below the industry average of 2.71. Conversely, industry players, such as Accel Entertainment, Melco Resorts and Boyd Gaming, have P/S ratios of 0.62X, 0.72X and 1.69X, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has been revised downward, decreasing from $2.06 to $1.54 over the past 30 days.
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 100.4% surge in 2026. Conversely, industry players like Accel Entertainment and Boyd Gaming are likely to witness a rise of 13.4% and 7.1%, respectively, year over year in 2026 earnings. Meanwhile, Melco Resorts’ earnings are likely to increase 44.1% year over year in 2026.
DKNG currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.