Walmart (WMT) Stock: Retailer Pushes Into Drone Delivery and Google Gemini AI Shopping Tool

TLDR

• Walmart plans to expand drone delivery to 270 stores by end of 2027, up from 120 stores currently
• Partnership with Google’s Gemini AI assistant will help shoppers discover and buy products more easily
• Drone service reaches over 40 million shoppers in new markets including Los Angeles, Houston, and Miami
• Company already partnered with OpenAI’s ChatGPT in October for “Instant Checkout” feature
• Wing drones carry up to 5 pounds and deliver within 30 minutes, free for Walmart+ members

Walmart announced plans to expand drone delivery to 150 additional stores by the end of 2027. This brings the total to 270 stores offering the service.

The retailer currently partners with Alphabet’s Wing and Zipline for drone operations. Service areas include Dallas-Fort Worth, Atlanta, Northwest Arkansas, and Charlotte, N.C.

The expansion will reach over 40 million Walmart shoppers, up from 2 million today. New markets include Los Angeles, Houston, Cincinnati, St. Louis, and several Florida cities like Orlando, Tampa, and Miami.

Walmart Inc., WMT

Wing’s drones carry up to 5 pounds over 6-mile round trips. They deliver small tethered boxes in yards within 30 minutes.

Customers typically use drone delivery for last-minute essentials like ingredients or medicine. About 25% of customers use the service three times weekly.

Walmart offers drone delivery free to Walmart+ members. Other customers pay $19.99 for the service.

Google Partnership Targets AI Shopping

Walmart and Google announced a partnership Sunday at the National Retail Federation’s Big Show in New York City. Shoppers will use Google’s Gemini AI assistant to discover and buy products from Walmart and Sam’s Club.

Incoming CEO John Furner and Google CEO Sundar Pichai shared the news on stage. The companies did not disclose financial terms or a specific launch date.

The experience will start first in the U.S. before expanding internationally. Furner called the transition from traditional search to agent-led commerce “the next great evolution in retail.”

This follows Walmart’s October deal with OpenAI’s ChatGPT. That partnership introduced “Instant Checkout,” allowing buyers to purchase items without leaving the chatbot.

OpenAI has similar deals with Etsy and Shopify merchants like Skims, Vuori, and Spanx. Walmart also runs its own AI chatbot called Sparky on its app.

David Guggina, Walmart U.S.’s chief ecommerce officer, said agentic AI helps meet customers earlier in their shopping journey. The technology works across multiple platforms, reducing reliance on Walmart’s app and website.

Challenges and Competition

Drone delivery faces several obstacles. Requirements like human spotters for each drone have limited growth.

Complaints center on noise, safety, privacy concerns, and weather constraints. These factors could slow the planned expansion.

Competitors Amazon and DoorDash also offer drone delivery in select areas. The race for last-mile delivery innovation continues across the retail sector.

Furner said Walmart is “trying to close the gap between I want it and I have it.” The company views AI as central to this mission.

Walmart leaders have discussed how AI will change the workforce and employee roles. Current CEO Doug McMillon, who retires February 1, said AI “is going to change literally every job.”

On TipRanks, WMT stock has a Strong Buy consensus rating based on 25 Buys and one Hold rating. The average Walmart price target of $125.75 implies 9.8% upside potential from current levels.