Can Home Depot’s AI-powered push to court pros move the needle in its own business?
Atlanta-based custom home builder Timothy Ellsberry is impressed by Home Depot’s latest AI-powered efforts to attract professionals. Ellsberry joined Home Depot’s Pro program in late 2024. He told CNBC that the company is looking at but has yet to adopt its expanding suite of digital tools — including AI-powered BluePrint Takeoffs, which launched in November. The tool quickly creates take-offs (or entire lists of materials and resources needed to prepare project bids) and seamlessly allows contractors to purchase everything directly from Home Depot. “I could see myself moving away from CRM as they build their programs [customer relationship management] Since Home Depot manufactures these resources, I use the cheaper option. They add it to their platform more or less for free, said Ellsberry, 38, founder and lead developer of ERP Legacy Developments, which operates in Home Depot’s backyard. Home Depot is also headquartered in Atlanta. “When they add tools to the package for us, it eliminates some of the extra costs on our overhead,” added Ellsberry, pointing to potential annual savings of $3,300 if using Blueprint Takeoffs. I could see in their program that I was moving away from the CRM I was using. Timothy Ellsberry Amid a slower-than-expected housing market recovery that has weighed on the stock, Home Depot has made the hidden gem of its 2024 acquisition of SRS Distribution, a commercial lending system that allows contractors to buy and pay for materials. Then, leveraging the power of AI in BluePrint Takeoffs can help professionals grow their businesses, according to the company. “We can get things back to a customer within a day or two,” said Michael Rowe, vice president of Home Depot’s Pro business. “So if you’re looking for a marker, it’s going to be about conversion because that leads to more sales.” Rowe declined to share conversion metrics but told CNBC that Home Depot saw a “nice increase in engagement with the tool” as more sales were made.[We] “I certainly expect that conversion to improve,” he said. But the real question is whether Home Depot’s new tools will result in higher margins for the home improvement retailer. Analysts are not convinced. “I don’t know if that necessarily helps margin rates,” Mizuho’s David Bellinger said, adding that it depends on what category of products are sold. Home Depot’s margins are under pressure. “Our gross margin in the third quarter was as follows: Chief Financial Officer Richard McPhail said in the company’s last earnings call. said: 33.4%, flat from the third quarter of 2024, flat from the third quarter of 2024.” But Home Depot said the professional group, which accounts for about 55% of its revenue, also buys gloves, masks, tools and other things needed to keep projects going. “The margin impact could be neutral, depending on the mix,” Bellinger said. Depot’s Pro program last year was largely on bulk building materials, “Those are framing, drywall, shingles, backerboard, caulk, mud,” he said. Home Depot also purchased trash bags, plumbing supplies, light fixtures and safety-related equipment, in an evolution of Home Depot’s Renowalk vehicle. Rowe said the real-time listing of Home Depot products is still in test mode, but with about 40 to 50 active customers, Home Depot continues to navigate a negative macro environment. The stock was up 11.5% last year, lagging behind due to higher mortgage rates. It fell. It was a repeat of 2024, when the Fed’s multiple rate cuts in October and December failed to meaningfully lower long-term bond yields, providing little relief, but stars in 2026, in part because of President Donald Trump’s push to lower Fed rates, said Home Depot was Trump’s best move on more dovish interest rates. Home Depot shares are up about 10.5% so far in 2026, reaching around $380. The president said Wednesday he wants to ban large institutional investors from buying more single-family homes, according to Mortgage News Daily. In addition to reducing margins, management also lowered its adjusted EPS outlook for the full year by 5%, predicting that the pressure would continue in the fourth quarter, while reiterating our buy-equivalent 1 rating on the heels of Q3 earnings. We found PT was about 10.7% higher than Thursday’s close at $420 per share. See here for a full list of stocks.) By subscribing to the CNBC Investment Club with Jim Cramer, you will receive a trade alert after Jim sends a trade alert before buying or selling a stock in his charitable foundation’s portfolio. NO FINAL OBLIGATION OR DUTY RESULTS FROM YOUR RECEIVING THE CLUB INFORMATION, ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB, AND NO RESULTS OR PROFITS ARE SPECIFICALLY GUARANTEED.
