How Walmart Can Benefit From AI and Automation

Walmart’s (WMT) investments into automation and artificial intelligence (AI) could nearly double the retailer’s operating income by fiscal 2029 from fiscal 2023, Jefferies analysts wrote in a note Wednesday.

The world’s largest retailer has made a number of investments in the space in recent years that are starting to pay off, from automated forklifts to AI-powered checkout cameras that can catalogue the contents of a customer’s cart to prevent theft.

Automation, AI Investments Could Drive Up To $20 Billion in EBIT by FY29

Walmart is progressing with the automation investments that the analysts predicted earlier this year could provide an estimated $20 billion in earnings before interest and taxes (EBIT) by fiscal 2029. The analysts projected that Walmart could save billions thanks to the efficiencies created by the automation investments, along with savings from advertising, reduction in food waste and theft, and automated driving.

One investment the analysts highlighted was Walmart’s investment in Fox Robotics, an autonomous forklift manufacturer. They noted that Walmart currently has 19 of the robotic forklifts operating across several of its distribution centers, with workers shifting to supervising the automated forklifts rather than having the technology replace them.

The Jefferies analysts also noted an investment Walmart executives have spoken about in recent earnings calls, an automated cart-checking system that would allow Sam’s Club customers to leave the store without having an employee inspect their receipt and cart at the door.

“This technology is currently present in ~168 clubs, with the plan to scale to all clubs by year-end,” the analysts noted. “Additionally, we’d note that the speed of checkout and satisfaction have increased by 25% and 15%, respectively, for each member due to these enhancements.”

Walmart Building High-Tech Perishable Distribution Centers

Also Wednesday, the retailer said it’s building five new high-tech distribution centers as part of its “supply chain modernization journey.” Walmart supply chain executive vice president Dave Guggina told CNBC that the new system will allow the company to have a clearer picture of its inventory, and get it to stores faster than before.

Walmart shares were little changed at $69.98 as of 1 p.m. ET Wednesday, but remain near the record-high intraday price of $70.25 set Tuesday.