Using artificial intelligence, or AI, in retail stores is becoming more commonplace, and retailers are taking advantage of its benefits. Retail stocks AI stocks are increasingly being sought after as a result, with investors wanting to pour capital into them for the potential returns they can offer.
From retailers’ point of view, AI is a win-win for them. In today’s highly competitive retail industry, retailers must continuously innovate to remain competitive and stay ahead of their rivals. One of the most potent tools available to them is AI. Retailers can use AI to enhance customer experience, optimize operations, and boost sales.
AI technologies like machine learning, natural language processing, and computer vision can assist retailers in comprehending their customers better and delivering personalized shopping experiences. Moreover, AI can automate repetitive tasks like inventory management and price optimization, reducing operational costs.
Fortune Business Insights reports that the global market size for Artificial Intelligence in retail was $3.75 billion in 2020. The market is projected to expand from $4.84 billion in 2021 to $31.18 billion by 2028, registering a Compound Annual Growth Rate (CAGR) of 30.5% from 2021 to 2028.
In summary, 2023 is proving to be a banner year for AI. With the emergence of ChatGPT and powerful generative AI concepts, there is never a better time to invest in this area.
Without a doubt, AI influences the retail sector immensely. It is one of the few industries that have experienced significant benefits due to advances in artificial intelligence. Consequently, retail AI stocks are a segment you cannot ignore when discussing the advancement of AI.
This article will explore the top retail AI stocks investors should consider adding to their portfolios.
| Ticker | Company | Price |
| WMT | Walmart | $139.25 |
| AMZN | Amazon | $93.55 |
| KR | Kroger | $46.91 |
Walmart (WMT)
Walmart (NYSE:WMT) is an internationally recognized and esteemed retailer that requires little introduction. The prevalence of its stores is such that 90% of Americans live within 10 miles of a Walmart location.
Walmart has seen an increase in profits over the past two quarters, and its average sales growth over the last year stands at 5.9%. This marks a period of growing earnings and revenue for the company.
You might not think of it, but Walmart is one of the pioneers in the AI revolution. Walmart uses AI to make operations easier and perk up the customer experience. As an example, it uses AI-driven robots to do jobs like managing inventory and restocking shelves.
Walmart is also utilizing the power of AI to provide a more customized shopping experience. Customers can be shown personalized suggestions based on browsing and purchase history using a recommendation engine.
Consequently, Walmart’s investment in its platform is proving to be a wise decision, as evidenced by its strong financial results. In 2022, the company’s e-commerce sales in the U.S. reached $47.8 billion, an 11% increase from the previous year. In addition, the latest quarterly report for Q4 2022 revealed that Walmart experienced a 17% growth in U.S. e-commerce compared to the previous year and an 18% growth over two years.
Overall, Walmart’s use of AI is helping them to stay ahead of the curve in the highly competitive retail industry. On top of this, Walmart has increased its dividend distributions for 49 straight years. That positions it on the cusp of being a Dividend King. Any way you slice it, Walmart is a top pick among retail AI stocks to buy.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is leading the way in AI innovation and has invested heavily in the technology to stay ahead of the curve. The e-commerce titan uses AI primarily through its cloud computing platform.
Amazon Web Services offers businesses various AI and machine learning services, such as Amazon Rekognition. This image and video analysis tool can detect objects, faces, and text within photos and videos quickly and accurately.
Amazon Lex is a service that allows businesses to create chatbots and voice-based virtual assistants. Similarly, Amazon Polly is a text-to-speech service that can transform the written text into human-like speech.
Another significant AI product from Amazon is Alexa, its virtual assistant. Alexa, part of Amazon’s Echo range of devices, has given Amazon an early lead in the smart speaker market. Alexa uses natural language processing and machine learning to comprehend and respond to voice commands. It can perform various tasks, including playing music, setting reminders, and placing orders from Amazon.
Moreover, in recent years, Amazon has invested heavily in AI-related mergers and acquisitions (M&A) activity. In 2019, Amazon acquired Canvas, a warehouse robotics company that uses AI and computer vision to automate tasks such as bin picking and box moving in warehouses.
Finally, it is worth noting that developments at Amazon should come as no surprise. Jeff Bezos once stated, “We’re at the beginning of a golden age of AI. Recent advancements have already led to invention that previously lived in the realm of science fiction — and we’ve only scratched the surface of what’s possible.”
To sum it up, Amazon has made much progress and efforts in AI. Due to its advanced technology, it is well-poised to stay ahead in the ever-evolving domain of AI.
Kroger (KR)
The American retail company Kroger (NYSE:KR) has also embraced AI.
Notably, last year, the grocer partnered with Nvidia (NASDAQ:NVDA) to expand Kroger’s freshness initiatives, enhance shipping logistics, and create a better shopping experience. Kroger utilizes digital “twin simulations,” virtual models that accurately reflect store layouts and other operations to achieve this.
Furthermore, Kroger is exploring using AI technology to improve its operations. These include detecting freshness deterioration through computer vision and analytics, enhancing its delivery systems, and optimizing store efficiency and processes through digital twin-store simulations.
On the financials front, similar to the trend observed across the industry, Kroger also benefits from the increased focus on essentials in the current inflationary environment.
The retail giant recently shared impressive fourth-quarter results, including better-than-expected adjusted earnings per share. Moreover, the company is optimistic about its same-store sales growth potential for 2023.
In addition, Kroger saw a tremendous 12% year-over-year increase in digital sales for the quarter. This marks a significant acceleration from the 10% growth in Q3 and 8% in Q2. It is the fruit of the retail giant’s e-commerce and digital initiatives investments.
Separately, Kroger has put a hold on its share repurchase program due to a possible merger with Albertsons. The merger can potentially create a retail powerhouse, and Kroger’s management team is prioritizing paring down debt in anticipation.
Overall, Kroger’s impressive same-store sales growth rates, accelerating digital sales growth, and strategic financial moves highlight its commitment to staying ahead of the curve and positioning itself for success in the highly competitive retail industry.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.