Walmart and Amazon are investing heavily in artificial intelligence to improve efficiency, enhance customer experiences, and drive business growth. Both companies have made significant progress in expanding their AI capabilities across multiple divisions. Walmart is increasing its use of AI-powered coding assistance and completion tools after seeing substantial benefits in 2024.
These tools helped save about four million developer hours last year by speeding up code delivery, reducing bugs, and streamlining deployments. CEO Doug McMillon said that by improving productivity and cutting down on routine tasks, Walmart has more time to focus on initiatives that drive business growth. The retailer plans to roll out these AI tools to all developers in North America and India this year.
Walmart continues to prioritize generative AI to enhance customer and associate experiences. The company is also expanding the number of developers using its internal AI tools and applying AI to elevate search and discovery capabilities. Despite challenges with AI adoption in other sectors, Walmart remains focused on using technology to drive efficiency and improve customer experiences while making strategic investments in its tech infrastructure.
Amazon plans to invest over $100 billion in capital expenditures in 2025, with the majority directed toward enhancing AI capabilities in its cloud division. CEO Andy Jassy noted the company’s Q4 2024 capital expenditures of $26.3 billion are a good indicator of Amazon’s projected annual spend for 2025. This marks a significant increase from $78 billion spent in 2024.
Despite concerns that declining costs of AI might harm revenue, Jassy argued that lower prices would increase demand for AI services, particularly benefiting AWS. He compared the surge in AI demand to the early days of the internet and cloud computing. Amazon Retail CEO Doug Herrington emphasized the importance of balancing efficiency with innovation.
His comments come as Amazon undergoes significant cost reductions while planning $105 billion in capital expenditures for 2025. Despite layoffs, Herrington stressed the need for investment in new growth opportunities, particularly in areas like fast delivery and AI. Walmart’s investment in technology is poised to boost profitability and efficiency for brands, according to recent announcements by the retail giant.
Boosting AI for efficiency and growth
During the company’s fourth-quarter earnings call on February 20th, executives detailed how improved supply chain efficiencies, price rollbacks, streamlined fulfillment capabilities, and expedited delivery services could positively impact manufacturers’ bottom lines. Walmart’s dedication to leveraging AI and automation has led to significant enhancements in supply chain accuracy and speed, resulting in lower operational costs and better product availability.
“Our technology capabilities adjust prices dynamically based on demand, competition, and inventory levels,” explained Walmart’s CFO Doug Rainey. This strategic use of technology could help brands optimize their margins and ensure competitive pricing in the market. Over the past year, Walmart introduced 22,000 price rollbacks across its inventory to help consumers save money.
Additionally, the company has focused on improving delivery speed and accuracy for e-commerce shoppers. CEO Doug McMillan noted that brands partnering with Walmart Fulfillment Services (WFS) benefit from these streamlined logistics, leading to speedier deliveries and higher customer satisfaction. Almost 45% of orders are now being fulfilled through WFS.
Walmart has also expanded its same-day delivery strategy, reaching 3% of households and contributing an additional $36 billion in revenue year-over-year. “More than 30% of orders come from customers who opted to pay a convenience fee for expedited delivery,” Rainey elaborated. This uptake in expedited delivery underscores the growing consumer demand for quick and reliable service.
Despite economic pressures and inflation, Walmart’s grocery business continues to thrive. Rainey pointed out that consumers across all income levels are prioritizing value, leading more affluent households to shop at Walmart. This shift has driven market share gains, particularly in the grocery and health and wellness categories.
Walmart’s focus on technology and convenience has contributed to its growth. “We are strengthening our ability to serve people how they want to be served in the moment,” McMillan noted. The retailer is also seeing profits grow faster than sales, especially in higher-margin businesses like membership, marketplace, and advertising, thanks to a broader product assortment.
Moving forward, Walmart may be less willing to accept price increases from brand manufacturers as it continues to roll back prices on various items, including food. This strategy highlights Walmart’s position as a value-oriented leader in the retail industry while also providing opportunities for brands to thrive through improved operational efficiencies and expanded market reach.
