As most investors know, Home Depot (HD 2.75%) and Lowe's Companies (LOW 2.98%) are the country's two largest home improvement retailers. They have succeeded for decades by providing for such needs, and it should not come as a surprise that both companies have pivoted extensively into artificial intelligence (AI).
What may intrigue investors is that each company is not necessarily taking the same approach with AI, and that could affect profitability and, ultimately, stock returns over time. Hence, investors should evaluate each strategy to find which company has capitalized on AI in retail better.
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Each company's solutions
Most customers generally regard Home Depot as the store more geared toward contractors. To that end, the company is working to make AI an integral part of its customers' home improvement projects.
In partnership with Alphabet's Google, the company developed the Magic Apron assistant to deliver advice about projects and answer questions about products, both in the store and on its website and app.
And members of the Pro Xtra loyalty program for professional contractors can use the company's AI to generate project requirements and a corresponding product list for these customers. The technology will also help with finding items within the store and answering customer service questions.
In contrast, Lowe's bills itself as the store better suited for do-it-yourself (DIY) projects and has designed its AI to serve these customers. In a partnership with OpenAI, Lowe's has launched the Mylow digital assistant to help train employees to sell products more effectively. It will also help customers find products needed for various DIY projects through the first-ever AI-powered virtual advisor.
More recently, Lowe's has deployed AI agents across its stores to help answer basic questions, freeing up employees for more face-to-face customer interactions.
Results of AI
Despite AI's potential, the results are unclear, as neither company mentioned AI in its earnings report.
Still, in the earnings-call transcripts, Home Depot discussed how the technology helps contractors. Lowe's executive vice president for merchandising, William Boltz, took a different approach, talking about how AI helped employees perform jobs more efficiently.
NYSE: LOW
Key Data Points
Moreover, each company delivered a similar financial performance in 2025, with net sales up 3% yearly for both. Investors should note that each company reported slightly lower earnings amid rising operating expenses. That might partly explain the emphasis on employee productivity.
Still, Home Depot stock sells at a premium at a price-to-earnings ratio (P/E) of about 26 times versus the 22 for Lowe's. Home Depot has also had the higher P/E ratio for most of the last five years and offers a higher dividend yield: 2.4% compared to 1.8% for Lowe's. In the minds of some investors, that may justify Home Depot's higher valuation.
Home Depot or Lowe's?
Home Depot appears to hold the slight edge between the two. Lowe's trades at a lower valuation and appears to provide more verbal feedback on the effects of AI on its business. However, discussion is not the same as hard data on AI-driven results, which neither company offered.
Thus, investors should turn to the available data. Home Depot may have a slightly higher historical valuation, but when factoring in its contractor-supplier business and higher dividend yield, it is considered one of the best housing stocks for 2026.
