Costco’s latest earnings are highlighting how traditional retailers are adopting artificial intelligence to improve operations and reduce waste in perishable goods.
BNN Bloomberg spoke with Fiona Wilson, senior portfolio manager at Guardian Capital LP, about how companies across retail and other sectors are integrating AI tools while investors shift toward high-quality companies amid rising geopolitical uncertainty.
Key Takeaways
- Costco reported stronger-than-expected second-quarter results, supported by growth in executive memberships, which account for about half of members but generate roughly 75 per cent of sales.
- The retailer uses machine-learning demand forecasting in its bakery operations to predict daily production levels, helping reduce waste and improve inventory management for perishable goods.
- Artificial intelligence is also being used across retail for logistics, pricing, merchandising and fraud detection, improving efficiency and customer experience.
- Rising geopolitical tensions and market volatility are pushing investors toward high-quality companies with strong balance sheets, stable earnings and dividend growth.
- Companies across sectors — including retail, pharmaceuticals and semiconductors — are increasingly integrating AI into operations and strategy to improve productivity and long-term growth.
Read the full transcript below:
ANDREW: Costco reported higher revenue and profit in its second quarter. Our guest says the retailer is leveraging artificial intelligence integration in its bakery division. For more, let’s bring in Fiona Wilson, senior portfolio manager at Guardian Capital. Thanks for joining us.
FIONA: Thanks very much for having me today, Andy.
ANDREW: Talk to us about the latest quarter at Costco.
FIONA: It was a great quarter. Earnings came out better than expected. EPS beat by about three cents. Analyst expectations increased membership in the executive tier, and the executive membership is about 50 per cent of total membership but generates about 75 per cent of all sales, so that increased. So it was a very strong quarter for Costco.
The stock hasn’t moved up quite as much because it’s priced to perfection. It’s a quality stock. If you look at performance last year, a lot of quality stocks didn’t do that well. Everything was focusing on artificial intelligence, trade and the information technology sector, so we saw a lot of quality companies lag. This year is a different story. If you look at the returns of Costco this year, it’s a great consumer staple, in my opinion, to have in your portfolio.
ANDREW: Maybe we’re going to have a look at a 10-year chart for Costco to get a longer perspective. What are the executive memberships? People pay a bit more?
FIONA: Yeah, so it’s about $120 compared with about $60. And when they pay more, they seem to be the ones who are buying more. One thing that you mentioned too is I think you should be looking now at older-economy blue-chip stocks that are integrating artificial intelligence.
We’ve seen artificial intelligence, like a lot of the tech sector, do extremely well, and now with the volatility coming back into the market, it’s a good time to be looking at really strong blue-chip stocks that are leveraging artificial intelligence.
ANDREW: The AI — how are they using it?
FIONA: So they’re using it for their distribution, as you mentioned, the bakery, and for inventory. They started the project in 2018 to forecast demand so bakery items don’t go stale, and for perishable goods. And it was really creative, and now they’ve got it in all their perishable areas, so that’s really interesting.
They’re also using it in their warehouses. They have robots to move the skids around — the heavy skids. They’re using it on their cashing out for fraud. And they’re using it in the customer experience area online.
And actually that kind of went through the sales this year because their online presence. In the last earnings that came out, they had a lot stronger sales from the digital component piece, so that worked out quite well for them.
ANDREW: Interesting. You know, you just reminded me of something. A few years ago they started selling gold directly to consumers, and I bet that’s doing pretty well, right?
FIONA: Very well for them. Bar sales, yeah, started a couple years ago — perfect timing of what’s happened to gold in the markets.
ANDREW: Now that’s interesting with perishable goods, though. If AI can predict demand — the slump, you know, the second Tuesday of the month for some reason is weak — you can avoid wasting stuff.
FIONA: Yeah, exactly. And you know, the bakery at the beginning would just bake so many items and they’d all go bad. And it’s a huge, huge loss there. So it’s really changed quite a bit.
ANDREW: You have some other stock ideas for us. Eli Lilly, you reckon? I mean, obviously it’s almost synonymous with the obesity and diabetes drugs now.
FIONA: Yeah, it’s number one in that area. Basically exactly what you said — diabetes and obesity. That is just taking off. They’ve done extremely well. They had record sales this year. That area is really, really moving forward.
And kind of talking about how they’re implementing artificial intelligence, in 2024 they hired a chief information technology officer just focusing on implementing it into their strategy. And they have a collaboration with Nvidia where they’re making supercomputers so that they can look at drugs and screen drugs much quicker, back-test drugs in scenarios that aren’t using test tubes. So it’s really increasing that area.
ANDREW: TJX — we know them for Winners, for example, in Canada. They’re a huge discount apparel chain mostly in Canada and the U.S.
FIONA: Yeah, that’s another great stock. Again, looking at the older economy, but these stocks that are high quality, strong revenue generators and do well in markets that are strong, which we’ve seen double-digit returns globally for the last three years, but also do well in volatile markets, which we’re starting to see now.
They use artificial intelligence. They actually use digital agents to source buying patterns, and then when they put it onto their floor, they’re using another machine-learning algorithm to price everything and to put things in the proper locations for demand.
So it’s quite interesting how these old-economy stocks are integrating AI, and it gives a more stable long-term revenue stream compared with some of the more volatile stocks we’ve seen do really well the last couple of years.
ANDREW: Retailers in particular are exploiting AI. I guess eventually consumers might start getting their own AI tools for looking for bargains, and it’ll turn into a battle?
FIONA: Yeah. Well, there’s one app called Flipp that you can look at to see where the best sales are in grocery items. Yeah, yeah. So that’s an example of that.
ANDREW: AI agents battling it out in the background. You have a tech idea for us — ASML, the Dutch company, huge in chip lithography.
FIONA: Yes, that’s a really strong company that we really like. It’s, as you said, lithography, so that’s in huge demand, a huge tailwind. So they have EUV — extreme ultraviolet — and they basically have the monopoly on that. So it can do the smaller chips, and that’s kind of where it’s at now.
So Taiwan Semiconductor, Intel and Samsung are their customers, and there are huge tailwinds there. They had a large backlog of orders in their last earnings that just came out, so they’re really poised well to do well in the future.
ANDREW: And they have pricing power.
FIONA: Oh, huge pricing power. And that’s in their sales — they’ve been exceptional. And the backlog too, with the volatility going on in the markets, gives you a steady revenue stream because they’ve got the orders already in place.
ANDREW: Interesting. It almost sounds like game theory, though. They don’t want to go too far with jacking up the prices and alienating the customers.
FIONA: Yeah.
ANDREW: But a Dutch company, yeah?
FIONA: From the Netherlands, yeah.
ANDREW: It’s a pity we don’t have more of these domestic tech giants.
FIONA: No, Canada doesn’t have as many in that space at all. Europe does, though, as you can see.
ANDREW: Yeah, the Europeans have some contenders there. Thank you very much. That was great.
FIONA: Okay, thank you very much.
ANDREW: Our guest has been Fiona Wilson, senior portfolio manager at Guardian Capital.
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This BNN Bloomberg summary and transcript of the March 6, 2026 interview with Fiona Wilson are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
