Walmart offers a much-needed example of how artificial intelligence can boost a company’s productivity during a time of turbulence in a robust marketplace. “Walmart made a strong statement about generative AI and how it’s speeding up critical workstreams and reducing costs for the organization,” Morgan Stanley analyst Simeon Gutman wrote in a note. “This is one of the most direct evidences of generative AI we’ve heard across the retail industry.” In a conference call this week, shortly after a strong quarterly earnings release, the retailer suggested that AI tools are helping it increase productivity and improve its product catalog. “We’ve used multiple large-scale language models to accurately create or improve 850 million+ data and catalog entries,” CEO Doug McMillon said. “Without generative AI, it would have taken nearly 100 times as many people to complete this work, and the same amount of time.” Walmart’s comments come amid uncertainty for some of the leading AI companies in 2024. Earlier this month, many popular AI stocks faltered as investors worried about long-term investment payoffs. Recession fears, the unwinding of carry trades, and general profit taking also contributed to the recent turmoil. But the sector has rebounded sharply this week, with Nvidia and Super Micro Computer up 19% and 25%, respectively. Microsoft is on pace for a 3% gain, while Meta Platforms is up 2% and on track for a third straight weekly gain. Advanced Micro Devices rose 11%. Morgan Stanley’s Gutman sees Walmart as the “retailer of the future” with favorable risk/reward. He maintained his overweight rating and raised his price target to $82 a share from $75, implying a 12% upside from Thursday’s closing price. “Another quarter supporting the story of market share gains, rising margins and profit growth,” he wrote.
