Here's How Costco's AI and Digital Bet Is Fueling Faster Sales Growth
Costco Wholesale Corporation’s COST digital investments are becoming a bigger contributor to sales growth as the warehouse retailer sharpens its focus on personalization, convenience and faster member engagement. A variety of strategic enhancements across the company’s websites and mobile platforms are supporting these gains and helping Costco strengthen interactions with members beyond its warehouses.
Personalized product recommendation carousels generated more than $470 million in e-commerce sales during the second quarter of fiscal 2026. Costco also said that modernized product display pages and personalized marketing tied to browsing history supported incremental sales growth and higher traffic across its digital platforms.
Traffic trends further reinforce the momentum. App visits rose 63%, while e-commerce site traffic increased 32%, indicating that members are increasingly engaging with Costco digitally. Management also noted that same-day delivery through Instacart, Uber Eats and DoorDash continues to grow faster than the broader digital business, reflecting rising demand for convenience-focused shopping.
Costco is also working closely with leading artificial intelligence companies as consumers increasingly adopt AI-driven shopping tools. Inside warehouses, the company is rolling out employee pre-scan technology, mobile wallet enhancements and pharmacy pay-ahead services to improve checkout speed and handle rising customer volumes more efficiently.
The retailer appears focused on integrating these digital tools directly into its membership ecosystem. Costco is using targeted digital communications and retention strategies to improve renewals, encourage executive membership upgrades and increase shopping frequency across both online and warehouse channels.
Costco Peers Walmart, Target Accelerate Omnichannel Growth
Walmart Inc.WMT is also leaning heavily on digital investments to drive higher engagement and faster sales growth. Walmart reported 26% global e-commerce growth in the first quarter of fiscal 2027, supported by store-fulfilled delivery, marketplace expansion and advertising growth. Walmart said that marketplace sales in the United States rose nearly 50%, while Walmart Connect advertising revenues climbed 44%. Walmart also highlighted growing adoption of its AI shopping assistant, Sparky, with weekly active users more than doubling sequentially.
Target CorporationTGT is expanding its digital ecosystem to strengthen customer engagement and traffic growth. Target reported digital comparable sales growth of 8.9% in the first quarter of fiscal 2026, led by more than 27% growth in same-day delivery powered by Target Circle 360. Target also said that non-merchandise revenues rose nearly 25%, supported by growth in Roundel advertising revenues, Target Plus marketplace sales and membership revenues. Target is investing in technology upgrades, digital merchandising and fulfillment capabilities to improve product availability and shopping convenience.
What the Latest Metrics Say About Costco
Costco has seen its shares jump 4.2% over the past three months compared with the industry’s growth of 2.2%.
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From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 47.07, higher than the industry’s ratio of 32.45. Although the premium multiple may appear elevated, investors often view Costco as a high-quality retail operator supported by resilient comparable sales growth, strong membership retention and expanding digital capabilities.
As long as Costco continues to deliver consistent sales growth and strengthen its omnichannel presence, its premium valuation could remain supported by investors seeking stable growth within the retail sector.
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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.1% and 13%, respectively. For the next fiscal year, the consensus estimate indicates a 7.6% rise in sales and 10.2% growth in earnings.
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Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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