Black Friday might be the biggest shopping day of the year for Americans, but in 2023, half of shoppers got a jumpstart on the gift-buying process… making their first purchases before Halloween.
That means the holiday shopping season is already in full swing.
Heck, by the time it’s over, Americans as a group will have spent between $957.3 and $966.6 billion, according to estimates from the National Retail Federation.
Aiding in that search and giving retailers a leg up on profits this year is none other than artificial intelligence (AI).
Savvy companies are leveraging AI tech in groundbreaking ways to reduce overhead, streamline and reduce customer returns, and help their customers find what they need quickly at a price they like.
At LikeFolio, we’ve been evaluating our consumer insights to spot the potential winners and losers of another record holiday spending spree.
And among the companies leveraging AI, these three names made our short list as must-watch stocks this holiday season…
Stock No. 1: Walmart (WMT)
This marks the first holiday season when Walmart (WMT) will use its AI-powered “next-generation supply chain” to optimize searches and ad service, minimize returns, and upgrade inventory systems.
For 80% of Americans, Walmart’s new and improved system means they’ll be able to get groceries and gifts delivered as soon as 30 minutes.
And when it comes to AI-enhanced search, Walmart is making the holiday shopping experience easier than ever. Simply enter “office holiday party” into the search bar and AI will curate a shopping list for you in seconds.
LikeFolio data shows Walmart’s buzz rising 3% year over year and 8% on a quarter-over-quarter basis:
We also know the company is also garnering positive traction in its Sam’s Club offering. The bulk retail brand is now on par with Costco (COST) from a Consumer Happiness perspective, with positive sentiment around the Sam’s Club brand gaining 6% on a year-over-year basis.
Of course, last week’s earnings report complicated matters.
While the company beat estimates and noted 5.2% year-over-year revenue growth to $160.8 billion, it tempered expectations for the all-important fourth quarter – warning that purchases slowed down in the latter half of October.
“This gives us reason to think slightly more cautiously about the consumer versus 90 days ago,” CFO John David Rainey remarked, noting that “in the last couple of weeks of October, there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
Despite short-term uncertainty, we believe Walmart’s AI investments will pay off over the long-term.
Not only will AI-enhanced search help consumers find what they need this season – and maybe even a little extra – but they’ll remember how much easier it was to shop at Walmart this year… and potentially keep coming back for more.
Either way, Walmart is one retailer to watch this season.
Stock No. 2: Etsy (ETSY)
Etsy (ETSY) is a two-sided global marketplace that specializes in handcrafted, one-of-a-kind goods. There are over 45 million unique items to discover – from jewelry, clothes, crafts, party supplies… with plenty of rare and vintage finds in between.
It’s the ultimate holiday shopping destination. In fact, until November 29, shoppers can take advantage of its Cyber Sale for up to 60% off.
If you’ve ever had trouble finding the right words to describe what you’re looking for… Etsy has you covered.
The company launched a cool new visual search feature to help shoppers find what they need – and fast. When an iPhone user taps the new camera icon in the search bar and uploads or takes a photo, Etsy will curate visually similar items in the blink of an eye.
With investments in generative AI, Etsy is also working on a “Curation at Scale” initiative to train machine learning datasets. Eventually, users will be able to ask a chatbot a question and get curated results that match what they’re looking for.
We’ve made money on this stock several times over as our consumer insights machine picked up on both bullish and bearish momentum in years past.
And we can tell you that heading into this holiday season, Etsy looks like a promising bet.
Consumer mentions of buying a meaningful, homemade item on Etsy.com are trending 12% higher year over year:
That’s a great sign.
Even better? Consumer Happiness is at a stable 72%.
We like what we see from Etsy – but there’s more for you to learn about this winner right here.
Stock No. 3: Pinterest (PINS)
Even though it’s often lumped into the social media stock category, what Pinterest (PINS) provides is more like the ultimate vision board.
It allows users to curate new recipes, fashion trends, wedding ideas, crafting inspiration, home design, organizational tools… pretty much anything you can think of.
Looking for Christmas crafts to keep your kids occupied? Head to Pinterest to get inspired, build your vision board, and buy what you need without ever leaving the app – no popups or 30-second forced video ads needed.
The company realized the importance of seamlessly blending content and ads where people weren’t even really able to tell where one began and the other ended. Way back in 2015.
For an undisclosed figure, Pinterest bought the recommendation engine tech startup Kosei, which could recognize “400 million relationships between 30 million products.”
With Kosei’s tech, Pinterest can help match content recommendations people want to see while also connecting what people are searching for with relevant advertisements.
The company also acquired AI-powered shopping platform THE YES last year, which lets users shop a personalized feed based on their input on brand, style, and size.
Anytime users interact with Pinterest, the app collects more and more data. And its recommendations – and the ads it pushes out – get smarter and smarter.
And the user experience just gets better and better.
Like Etsy, Pinterest boasts a 72% Consumer Happiness level, putting it well above peers:
With Pinterest’s AI-powered search recommendations, it’s not just about showing users “more of the same.” It’s about creating new inspiration – and monetizing it.
Pinterest is already a pro in this arena: A stunning 85% of weekly U.S. pinners have made a purchase from a pin they saw from a brand.
And a game-changing Amazon.com (AMZN) partnership will take Pinterest’s “shoppable” content to the next level.
Get the full story on Pinterest here – we believe this could be the surprise holiday winner of 2023.
Bonus Pick: The “Undercover” Holiday Winner Under $5
While it’s not a traditional “holiday” pick, this AI-powered player is still giving consumers something they need this season: all the live sports they could ask for.
Demand mentions are surging this fall, but more impressive is the impressive 86% Consumer Happiness score this tiny company garnered over the last few months.
You can still grab shares for under $5 but only if you act fast… because this microcap is on a roll. More here.
We’ll have more holiday investing coverage for you this week, so stay tuned.
Until next time,
Andy Swan
Founder, LikeFolio