AI Expected to Save Gap, Macy's, V.S. $6B in Costs and Boost EBIT Estimates by 20% in 2026.

Morgan Stanley estimates that AI could save softlines companies, such as Gap and Macy's, $6B in future costs. This could lead to a 20% increase in earnings before interest and taxes (EBIT) estimates for 2026. The analysis also found that recent earnings transcripts mention AI-related cost savings opportunities.

Morgan Stanley estimates that artificial intelligence (AI) could save softlines companies, such as Gap (GAP) and Macy's (M), up to $6 billion in future costs. This significant cost-saving potential could lead to a 20% increase in earnings before interest and taxes (EBIT) estimates for 2026. The analysis, conducted by Morgan Stanley's global director of research, Katy L. Huberty, highlights that AI-related cost savings could represent a 200 basis point margin boost Gap, Macy’s, V.S. could see $6B in AI cost savings, 20% rise in 2026 EBIT estimates^[1].

The report suggests that AI could save upwards of $6 billion for companies like Gap, Macy's, and Victoria's Secret (VSCO), with a midpoint estimate of $1-12 billion in cost savings. This cost-saving opportunity is expected to be a significant factor in the sector-wide adoption of AI technologies. Other retailers positively affected by AI include Kohl's (KSS), American Eagle (AEO), Levi's (LEVI), Warby Parker (WRBY), and Under Armour (UAA).

The analysis also found that recent earnings transcripts mention AI-related cost savings opportunities, underscoring the growing importance of AI in the retail sector. The use of AI in areas such as inventory management, customer service, and supply chain optimization can lead to substantial cost reductions and improved operational efficiency.

As AI continues to evolve and become more integrated into business operations, its potential to drive cost savings and enhance profitability in the retail sector is expected to grow. Investors and financial professionals should closely monitor the implementation and impact of AI technologies on the financial performance of these companies.