Can Home Depot’s (HD) AI Push Offset Softer Same-Store Sales and a Weaker Earnings Outlook?

Simply Wall St.01-16

In recent days, Home Depot reported earnings that showed weak comparable sales and guided to about a 5% decline in full-year adjusted EPS, reinforcing concerns about soft consumer demand and pressured...

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At the same time, the company expanded its use of artificial intelligence through deeper collaborations with Google Cloud’s Gemini models and Rilla’s real-time coaching tools to improve customer service and operational efficiency.\nAn interesting tension for investors is that...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"HD":"家得宝"},"translate_title":"家得宝(HD)的人工智能推动能否抵消同店销售疲软和盈利前景疲软的影响？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"HD":1.5},"content_text":"In recent days, Home Depot reported earnings that showed weak comparable sales and guided to about a 5% decline in full-year adjusted EPS, reinforcing concerns about soft consumer demand and pressured operating margins. At the same time, the company expanded its use of artificial intelligence through deeper collaborations with Google Cloud’s Gemini models and Rilla’s real-time coaching tools to improve customer service and operational efficiency. An interesting tension for investors is that while Home Depot is leaning heavily into AI-driven tools like Magic Apron and Rilla’s coaching platform to enhance service and productivity, these innovations are arriving just as same-store sales have lagged for two years and earnings per share have fallen even as revenue has grown. We’ll now examine how the cautious earnings outlook and weaker same-store sales may reshape Home Depot’s longer-term investment narrative. Find companies with promising cash flow potential yet trading below their fair value.AdvertisementHome Depot Investment Narrative RecapTo own Home Depot, you need to believe its scale, brand and Pro focus can weather softer consumer demand, weaker comparable sales and pressured margins. The latest earnings, with a guided 5% decline in full year adjusted EPS and a negative share price reaction, sharpen near term concerns around profit resilience, while the biggest risk remains that deferred big ticket projects and margin pressure persist longer than expected rather than any immediate threat from the new AI initiatives. The expanded collaboration with Google Cloud to deploy Gemini powered “agentic AI” tools, including upgrades to the Magic Apron assistant and Pro list builders, is the most relevant recent announcement here, because it sits directly at the intersection of Home Depot’s core catalysts of better service, higher productivity and tighter delivery logistics and the current worries about two years of lagging same store sales and less profitable incremental revenue. Yet even with these technology upgrades, investors should be aware of the growing tension between rising capital and AI investment needs and... Read the full narrative on Home Depot (it's free!)Home Depot's narrative projects $182.4 billion revenue and $17.4 billion earnings by 2028. This requires 3.4% yearly revenue growth and about a $2.8 billion earnings increase from $14.6 billion today.Uncover how Home Depot's forecasts yield a $394.21 fair value, a 4% upside to its current price.Exploring Other PerspectivesHD 1-Year Stock Price Chart Seven members of the Simply Wall St Community currently see Home Depot’s fair value between US$278 and US$394 per share, highlighting very different expectations. Against this backdrop, the risk that weaker same store sales and lower EPS guidance persist has important implications for how those valuations might eventually line up with business performance.Explore 7 other fair value estimates on Home Depot - why the stock might be worth 27% less than the current price!Build Your Own Home Depot NarrativeDisagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.A great starting point for your Home Depot research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.Our free Home Depot research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Home Depot's overall financial health at a glance.Looking For Alternative Opportunities?These stocks are moving-our analysis flagged them today. Act fast before the price catches up:Explore 23 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.AI is about to change healthcare. These 108 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.We've found 12 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Home Depot might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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