Visitors to the Bentonville, Ark.-based company's website will find AI technologies that understand their preferences and generative AI that predicts the type of content they would like to see.
In addition, the company said it is continuing to expand the beta test of its GenAI-powered shopping assistant, which Walmart announced in June and is designed to help customers find and choose the stuff they want to buy.
In August, and way before Christmas, Walmart CEO C. Douglas McMillon touted the company's AI efforts during its second-quarter earnings call.
"We're finding tangible ways to leverage generative AI to improve the customer, member, and associate experience," McMillon told analysts. "We're leveraging data and large language models from others and building our own."
As an example, McMillon cited the company’s use of generative AI to improve its product catalog.
Doug McMillon, chief executive officer of Walmart Inc., is betting big on AI-driven retail shopping tools.
Bloomberg/Getty Images
Walmart CEO bets big on AI technology
"The quality of the data in our catalog affects nearly everything we do from helping customers find and buy what they're looking for, to how we store inventory in the network, to delivering orders," he said. "We've used multiple large language models to accurately create or improve over 850 million pieces of data in the catalog."
McMillon said the work would have required nearly 100 times the current headcount to complete without generative AI in the same amount of time.
"And for associates picking online orders, showing them high-quality images of product packaging helps them quickly find what they're looking for," he said.
McMillon, who unloaded trucks at a Walmart distribution center as a teenager to save money for college, stressed the importance of the human factor, saying that the company is "anchored in the responsible use of AI," while moving with speed and in an EDLC--Every Day Low Cost--way.
"Today's Walmart is different," he said. "We are people-led and tech-powered."
All that tech power costs money, naturally, and Chief Financial Officer John David Rainey said that "while we're spending more on capex than we have historically, we're pleased with the returns from these investments, particularly the automation of our supply chain."
"We expect these investments to yield returns that will allow us to increase our return on invested capital each year," he said.
Walmart shares are up 61% year-to-date, and the stock is up 51.3% from a year ago.
The company is scheduled to post quarterly results on Nov. 19, and analysts expect it to earn 53 cents per share, up 3.92% from a year ago. Revenue is expected to increase 4.2% to $167.5 billion.
Several investment firms published research notes on Walmart before the earnings release.
Bank of America Securities analysts reiterated their buy rating and $95 price target on Walmart shares.
The analysts said that Walmart continues to gain share across incomes, including lower income levels--where peers have cited pressure--and product categories "as its strong value offering and high digital convenience resonate."
Analysts see more online spending for holidays
During the earnings call, Rainey told analysts that the retailer sees "higher engagement across income cohorts with upper-income households continuing to account for the majority of gains even while we grow sales and share among middle- and lower-income households."
BofA said store remodels, online stock-keeping unit (SKU) expansion, including through third-party marketplace and express delivery capabilities, are driving broad-based transaction and unit strength and participation in the company's membership service, Walmart+, which saw double-digit growth in sign-ups in the second quarter.
"For holiday, we think a shortened selling season (5 fewer days between Thanksgiving & Xmas vs. last year) will likely lead to higher online spend, favoring large digital/omni-channel players like WMT," the firm said.
BofA's analysts said they saw potential for third-quarter upside given that Bloomberg Second Measure credit and debit card data shows an acceleration in observed sales for Walmart in contrast to BofA and Wall Street comp forecasts, implying a deceleration.
"We think F3Q comps will continue to reflect positive y/y [year-over-year] transactions and strength in grocery and health/wellness," the firm said, adding that investments in supply chain and automation and third-party marketplace offerings further support sales and gross margin upside potential.
Jefferies raised Walmart's stock price target to $100 from $90, keeping a buy rating on the shares.
Heading into the third quarter prints from the discount retailer group, the firm said that Walmart remains a top pick. They expect the company to report "a beat and raise" quarter.
Retail store foot traffic data continues to trend positively, and the analyst tells investors in a preview that the firm believes the company is well-positioned to continue to gain share into the holidays.
Morgan Stanley raised Walmart's stock price target to $89 from $82 while maintaining an overweight rating on the shares.
The firm expects "modest upside" for Q3 results and Q4 implied guidance on higher operating leverage.
The firm said the stock should remain supported provided that Walmart continues to penetrate high-income cohorts and leverage critical mass in e-commerce.
