Justin Post, Bank of America internet analyst, joins CNBC's 'The Exchange' to discuss the rise in shopping chat bots, how the features are helping drive traffic to retailers, and more.

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The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

AI-powered chatbots are increasingly being utilized during the holiday shopping season to help consumers find the best deals, according to recent research from Bank of America. Internet research analyst Justin Post highlights a 31% increase in AI chatbot usage year-over-year, as noted by Salesforce, with a corresponding 9% rise in conversion rates on sites leveraging these technologies. This trend is linked to AI chatbots guiding users to affordable products, thereby increasing traffic to retail sites.

Chatbots driven by AI technology are becoming more integrated into consumer experiences, either on platforms like OpenAI or on retailer websites where users seek assistance in finding the best deals. This integration not only boosts site traffic but also improves conversion rates. While not everyone finds these tools effective initially, the effectiveness of AI chatbots improves with use, creating a habit that encourages faster growth among regular users.

In the context of stock market implications, Amazon, with its cloud and device divisions, is positioned to benefit from integrating AI into its retail operations. The company's performance during the Black Friday sales season exceeded expectations, suggesting strong potential moving forward. Other companies like Meta are also utilizing AI effectively in media integration, with more developments anticipated in the future. While Restoration Hardware (R.H.) is more related to the housing market, a recovery could enhance its performance, offering potential opportunities for investors.



AI chat bots help people find deals during holiday shopping season

Another trend we're seeing this holiday season is an increased use of A.I. chatbots. Bank of America has some new research out quantifying it showing that Salesforce indicated use of A.I. online chatbots was up 31 percent year on year and sites with A.I. services had a 9 percent increase in conversion rates. Joining us now is the author behind the piece Justin Post Internet research analyst at Bank of America. So the stuff really kind of works. Justin welcome. Great. Thanks for having me on. I appreciate it. Where in particular do you think they're successful. Sure. I think they really help people find deals and people are looking for value this holiday. Not a lot of chatbot usage last year. So the numbers are really strong year over year. But the sites that are really integrated with A.I. and integrated their data with with A.I. are seeing a nice uptick in traffic this year. So when people go on go on the side and say where can I buy the best product at the lowest price price A.I. chatbots are driving that traffic to retailers right now. OK. So can you give me some great. I have had zero experience with that. So in other words are you saying people are going to like open A.I. and asking for deals or are these chatbots that exist on a Web site that they have to go visit or an on an app that they have to go find. Sure. It can be general usage as a traffic director on open A.I. or Google with with A.I. overviews or some of the sites that have integrated A.I. technology where you can ask questions while you're on the site. So it's it's driving traffic to retailers. And then once you're on the site you can use A.I. and it's improving conversion rates. So it's kind of a double impact for for the sites that have have A.I. technology. Yeah. And again I mean we had a fun package right. I use nibble on I think it was like a mattress site maybe a beauty site to try to get a deal. But my experience was kind of mixed and it wasn't clear that it was really driving deal deals in the first place. But again I'm sure there are people out there who are really refining their use of these things right. Absolutely. I think you get better at using them as you use them more. And Google did point that out with A.I. overviews. Those that use the more are growing at a faster rate than those who haven't tried it. So it's kind of a habit and people get better at it over time. What would be your your kind of stock plays kind of stemming from all of this. If this is going to continue and as we know with new technology we're going to see more and more adoption. Sure. I think Amazon which has a whole cloud division and a device division is going to be really strong with usage of A.I. We were encouraged with the Black Friday data sales growth at or above our expectations for the whole holiday season despite all the earlier promotions in October. So someone like Amazon is going to be very strong integrating A.I. into their retail site. And we think a key beneficiary and also appeared to be having a pretty good holiday so far. So there's a stock we like other other stocks that use A.I. on the media side like Metta that that has pretty pretty good integration with A.I. and I think you'll see some new things from them next year. That's quite interesting. And just finally a couple of the other top e-commerce stocks R.H. Chewy at Lemon. Do these have any kind of overlap with our discussion. Sure. I think I think R.H. is more of a play on housing. I know we were talking about that with Home Home Depot but certainly expect them to benefit from lower rates and a housing recovery. So on the smaller cap side there's a stock we like that's done well this year. But the housing cycle we think is just starting. It's been depressed for two years. So for that reason we think we think restoration hardware is pretty interesting here. All right. Justin thanks for joining us. Really appreciate your time. Glad to be here. Justin Post with Bank of America.

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Rise of AI