Lowe’s Q4 Earnings Point to a New Operating Model
As big-ticket demand lags, the company is wiring artificial intelligence into conversion, Pro sales, and cost control
Lowe’s entered 2026 with modest growth and a cautious outlook.
In its fourth-quarter earnings report, the company said total sales reached $20.6 billion and comparable store sales increased 1.3% year-over-year, driven by growth in professional customers, online and home services, and strong holiday performance. The report also showed a 2.6% rise in adjusted earnings per share to $1.98 and reiterated the company’s full-year guidance for a flat to modest sales increase in 2026.
Over the past year, Lowe’s has moved AI from early tests into core systems that shape customer engagement, store execution, inventory flow, and internal workflows. On its latest earnings call, CEO Marvin Ellison outlined an internal framework for AI focused on improving how customers shop, how associates sell, and how employees work.
Home improvement retail hinges on product expertise. Customers often arrive with a project in mind but uncertainty about materials, compatibility, or installation options.
In March 2025, Lowe’s introduced Mylow, an AI-powered virtual home improvement advisor developed in collaboration with OpenAI. It provides conversational answers to project questions, product recommendations, and step-by-step guidance directly through Lowes.com and the Lowe’s app. According to company statements at launch, the tool brings expert-level advice into customers’ hands, aiming to reduce friction in decision-making.
Lowe’s also deployed a companion tool for store staff. In May 2025, the company rolled out Mylow Companion across more than 1,700 stores. This associate-facing AI app provides quick access to product details, project guidance, and inventory information on handheld devices, helping staff support customers with more confidence and consistency.
These tools address a structural challenge in home improvement retail: depth of product knowledge across thousands of SKUs. AI allows Lowe’s to standardize expertise across its fleet of stores, elevating both new hires and experienced associates.
Lowe’s has also extended AI into its professional (Pro) sales strategy. New Pro-oriented AI tools help prepare associates for planned-spend conversations by surfacing relevant product and customer information before customer interaction.
Where the Margins Are
AI at Lowe’s also drives operational improvements behind the scenes.
The company has rolled out AI-enabled inventory tools such as full shelf replenishment systems that use real-time sales and stock data to prioritize restocking lists for stores. These systems help ensure priority products are available where and when they are needed.
These operational capabilities are a key part of Lowe’s broader productivity goals. For fiscal 2026, Lowe’s said it is targeting approximately $1 billion in productivity gains, split roughly evenly between gross margin improvements and operating expense savings. Management noted that growth of the Lowe’s Media Network, which uses loyalty and purchase data to offer targeted advertising to suppliers, contributes to the gross margin portion of that productivity target.
Lowe’s Media Network uses data from its loyalty programs to provide targeted advertising opportunities across connected TV, online video, and digital channels, helping suppliers connect with customers more precisely.
AI has also extended into corporate functions. On the earnings call, company executives described how AI tools support engineering and merchandising teams, helping with tasks such as software development and code review and automating routine workflows so teams can focus on strategy and vendor partnerships.
Macroeconomic headwinds remain. Housing turnover is subdued, mortgage rates continue to fluctuate, and big-ticket discretionary projects have not fully recovered. Those conditions inform Lowe’s 2026 guidance, which assumes a flat to modest sales trajectory. The AI systems described by management now form part of that operating plan, shaping productivity targets, margin expectations, and store execution strategies in a year when the broader market is expected to remain flat.