It has been three years or so since artificial intelligence (or AI) leapt into the zeitgeist with the public introduction of DALL-E2 and ChatGPT. As AI technology develops, I have been tracking how companies are thinking about and using it.
The latest earnings season for the US stock market – for the third quarter of 2025 – recently ended and there were a number of companies that I follow or have a vested interest in, where the management teams discussed the topic of AI and how the technology could impact their industry and businesses. I shared the commentary from US-listed technology companies recently here. For commentary from non-technology companies, they are below.
Costco (NASDAQ: COST)
Costco’s management has integrated AI into Costco’s pharmacy inventory system and this has improved in-stocks to more than 98%, leading to mid-teen growth in pharmacy scripts filled, higher margins, and lower prices for members; management is deploying AI into Costco’s gas business, which is expected to improve inventory management and drive higher sales; management sees many tangible areas in Costco’s business to implement AI; management sees 2 concurrent phases for AI-implementation, namely, the member-facing phase, and the business-basics phase
An early use case has involved integrating AI into our pharmacy inventory system. This system now compares prescription drug pricing across vendors and autonomously and predictively reorders inventory, improving our in-stocks to more than 98%. This change has played an important role in helping us achieve mid-teen growth in pharmacy scripts filled and has improved margins while lowering prices to our members.
We’re now in the process of deploying AI tools in our gas business, which we expect will improve inventory management and drive incremental sales by ensuring we are always delivering the best value to our members…
…On the AI front, we’re extremely excited about what the future holds for us. I mean we see many opportunities that are really business-driven and tangible — have great tangible business value for us and you look at things like our procurement system as we are a global retailer and we buy from around the world as well as supply chain, what it can do there. And just the tools that we’ve seen that this has improved our employees’ work abilities and their skill sets as well as they do their day-to-day work…
…We look at it in a 2-phase approach that concurrently, we’re going to be focusing on member-facing, how do we improve the experience for the member through AI and then business in basics, how do we continue to focus on the business basics. Our mantra is to bring goods to market at the lowest possible price. And we think AI has a great asset to that, and it really can help us become a much better merchant out there.
Tractor Supply (NASDAQ: TSCO)
Tractor Supply is deploying AI in 3 buckets, namely, (1) off-the-shelf software, (2) custom-built software, and (3) AI agents; in off-the-shelf software, Tractor Supply’s software vendors are increasingly infusing their products with AI capabilities; in custom-built software, Tractor Supply has Hey GURA, Tractor Vision, and Quorso, as examples of AI-powered custom-built software; in AI agents, Tractor Supply recently integrated with OpenAI to enable 1,500 users within Tractor Supply to access AI agents to improve operational efficiency; an example of how AI agents have helped Tractor Supply is in providing automated approval to team members after completion of a manual task, when the task previously needed manual approval
On AI. We’ve got a lot of exciting things going on, on that front. And I’m going to break it into 3 buckets: enterprise-level software, the second is custom-built — now we call off-the-shelf enterprise software. Second, I’d call custom-built enterprise software. And then the third, I would talk about is around agents and automation.
First off, on the enterprise kind of purchased software. All of our vendors that we work closely with are now rolling in AI modules, AI analysis, AI capabilities, whether that’s in ERP systems, whether that’s in replenishment systems, marketing, et cetera. So we are fast adopters there where appropriate, obviously, with clarity of understanding of functionality and security.
The second one, in terms of custom-built, we talked about that several times in the past. Those software systems applications that we built out, we continue to scale, we continue to refine and they continue to — and they’ve become more and more key parts of just how we operate every single day. So whether that’s Hey GURA, which is increasing in its use, whether that’s Tractor Vision, in terms of our customers calling out when customers need help in areas that our team members might not have visibility to them or whether that’s in Quorso, which drives day-to-day operational tasks. So those are just 3 examples of custom-built applications that are scaled out now and continue to ramp in their impact in use by our team members.
On the third one around kind of automation and agent build-out. Over the last 6 months, we’ve done an enterprise integration with OpenAI. We now have over 1,200, I think 1,500 users that now have OpenAI enterprise accounts that’s integrated with our Snowflake Data Lake. And what that allows us to do now is to start really across the organization, building agents to automate and make things simpler and faster. An example of that would be in, say, our Fast team, where in the past, when a Fast team member would finish a planogram reset, they would take a picture, they would send it to their District Manager — District Fast Supervisor, they would review it and provide manual feedback. We’ve now built up the capability where when that picture is taken, AI assesses the picture and gives immediate feedback to the team member and our District Fast Supervisor only has to get involved with escalations. And so it just makes everybody’s job more efficient and allows us to execute faster. And kudos to the team across really all dimensions of our organization for embracing it and driving that productivity enhancements that it can provide.
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