Starbucks (SBUX 0.50%) stock has disappointed shareholders over the past few years, but it's making strong efforts to turn that around. It's on its fourth CEO over the past five years, and it's making all kinds of changes to its business.
Last week, it announced a major new initiative integrating its platform with ChatGPT. Can this help it finally recover?
Image source: Starbucks.
ChatGPT, what drink do I want?
All kinds of companies, including non-tech companies, are figuring out how they can use artificial intelligence (AI) to improve operations and customer experiences. Starbucks has always marketed itself as a digital-first company, and it's bringing a new innovation to ordering coffee.
Shopping through GPT is on the agenda for many businesses, but Starbucks' effort lets ChatGPT choose your beverage. You give it a prompt, like "I'm looking for something cold and sweet, not too big, with a unique flavor," and it will provide options for you. It still routes you back to the Starbucks app to finish the order and pay, but the groundbreaking part is helping you pick a drink based on your mood and preferences, or even a picture.
NASDAQ: SBUX
Key Data Points
Is this the caffeine boost Starbucks needs?
Starbucks continues to open stores at a rapid pace, with 128 net new stores in the 2026 fiscal first quarter (ended Dec. 28). It ended the quarter with a total of 41,000 stores, 18,000 of which are in the U.S., its main market.
But it's been under major pressure, with a confluence of factors working against it. Customers have complained about long wait times and high prices, and inflation makes it that much harder for people to shell out more than $5 for a customized beverage.
While revenue growth has been sluggish over the past few years, there was progress in the first quarter, with a 6% year-over-year increase in total revenue and a 4% increase in comparable sales (comps). Operating margin was lower than the prior year, but new CEO Brian Niccol is confident that profits will turn around after revenue.
Offering orders through ChatGPT isn't likely to move the needle in terms of sales, but it does help with the company's rebranding, making it an obvious choice for people already using ChatGPT and AI in general. It also may be the start of a larger push into AI that could bring it ahead of the curve in its space.
Starbucks stock rose after the announcement, and it's up 17% year to date. The market is feeling greater confidence about Starbucks' recovery, and investors should stay tuned for the second-quarter earnings release next week.
