Best Buy is likely to continue gaining momentum on several market trends, including the integration of artificial intelligence into consumer electronics, according to Truist Securities. The bank upgraded the consumer electronics retailer to buy from hold. It also hiked its price target on shares to $95 from $81, suggesting 15% upside from Monday’s close. “We think the improvement [in Best Buy] is being driven by continued replacement demand, internal changes (like appliance delivery) and emerging mini-product cycles (like AI wearables),” analyst Scot Ciccarelli said Tuesday in a note to clients. Ciccarelli expects Best Buy’s domestic comparables rose 2.5% in the fiscal second quarter, well above the analyst consensus of a roughly 1% increase. That would add to the company’s reported growth in sales in the previous fiscal quarter, fueled by consumer demand for gaming, computing and mobile phone-related products. Best Buy is slated to report its fiscal second quarter earnings on Aug. 27. BBY 3M mountain BBY in past 3 months Looking farther ahead, the retailer should get an even bigger boost from accelerating artificial intelligence adoption, which is poised to reshape the consumer electronics market, according to Truist. “As AI proliferates, we think we could see an accelerated adoption process for consumer hardware that would ultimately benefit Best Buy,” Ciccarelli wrote. “At the consumer level, AI is primarily being accessed today via computers and phones. However, the hardware requirements needed to take advantage of the latest AI models continues to increase..AI is being incorporated into smart glasses and other wearable items, like rings and watches.” Truist’s call does not jive with consensus on the Street. Of the 26 analysts covering Best Buy, 21 have a hold on the stock, while just three have a buy or strong buy rating on it, LSEG data shows. Shares have popped 43% over the past three months.
