AI chatbots could redefine shopping. This retailer is well-positioned to benefit, Cowen says

AI could redefine how consumers discover products and make purchasing decisions in the future. As consumers become more comfortable making purchases through AI chatbots like ChatGPT, companies that optimize their offerings to work with generative AI, just like search engines, are best positioned to catch the flow, TD Cowen analyst Oliver Chen wrote in a note Friday.

“Chat is the new means of payment,” the analyst wrote.

During the 12 months ending Sept. 25, Amazon and Walmart captured 88% of traffic from ChatGPT, according to Chen. During this window, Etsy received the largest percentage of its traffic from AI chatbots compared to retailers Walmart, Costco, Ulta, and Target.

But the race is wide open. AI chatbots generally account for just under 1% of total web traffic to major retailers, leaving enormous untapped potential.

For years, AI in retail has been mostly predictive, helping predict demand based on consumer demographics or shopping behavior. The next generation of so-called “agent AI” will be more prescriptive and can automatically translate those insights into actions such as adjusting prices, reordering products or tailoring marketing messages, Chen said.

Chen said Walmart is the leader of this transformation. The “Sparky” chatbot, a productive AI-powered shopping assistant, helps customers find products, compare options, and even plan for specific events. Powered by a massive Walmart+ membership base of nearly 30 million, Sparky can make personalized recommendations and even handle post-purchase tasks like returns.

“If you’re visiting Northwest Arkansas and want to know where a great place to go fishing is and what equipment can be delivered to your home from Walmart to take that fishing trip, Sparky can help you with that,” David Guggina, Walmart’s chief e-commerce officer in the U.S., said on the company’s latest earnings call.

Walmart is also using AI to manage inventory, predict demand, and increase order fulfillment speed. Some of the new fulfillment centers are reportedly twice as efficient thanks to AI-powered automation. According to Chen, the retailer is integrating different AI across departments and allowing natural language control; this turns complex data into conversational tools for employees.

The battle is about who owns the data. By maintaining ownership of first-party consumer data, Walmart can connect its AI ecosystem to its advertising business and loyalty programs to create a unified feedback loop. According to Chen, the data-centric strategy can position Walmart ahead of many competitors.

Artificial intelligence could be a powerful long-term catalyst for Walmart shares, which rose 0.1% on Friday. Shares gained 13% in 2025 and 27% in the last 12 months.

Write to Evie Liu at evie.liu@barrons.com