Gray house by Todd Kent via Unsplash
Wayfair (W) is making a major bet on artificial intelligence to transform how consumers shop for home goods. Yesterday, it announced its role as a foundational partner in the development of Google’s (GOOG) (GOOGL) Universal Commerce Protocol. The open standard aims to create seamless interactions between AI agents and retail platforms, potentially reshaping the entire e-commerce landscape.
The home furnishings retailer revealed that it co-developed this protocol with Google, which will soon power a new checkout experience that allows shoppers to purchase Wayfair products directly through Google’s AI Mode in Search and the Gemini app without leaving the platform. Crucially, Wayfair remains the merchant of record, maintaining control over pricing, fulfillment, and customer support even as transactions occur on external platforms.
This partnership builds on Wayfair’s existing AI investments, including its Muse discovery tool and the Discover tab in its mobile app, both designed to help customers navigate millions of products more efficiently.
Chief Technology Officer Fiona Tan emphasized that the company is investing in AI-powered discovery across all shopping channels. Wayfair has recognized that home furnishings represent a high-consideration purchase category that requires confidence and personalization.
The Universal Commerce Protocol announcement came during the National Retail Federation conference and signals Wayfair’s strategic positioning as agentic commerce enters its early stages. The question for investors is whether these AI initiatives can reverse the company’s recent struggles and justify adding, holding, or trimming exposure to W stock.
Is Wayfair Stock a Good Buy Right Now?
Wayfair is making an aggressive push into artificial intelligence to transform online furniture shopping, positioning itself as a leader in applying generative AI to retail even as the home furnishings market remains sluggish.
The company delivered strong third-quarter results, with revenue growing 9% and adjusted EBITDA surging more than 70% year-over-year (YoY), indicating that its technology investments are paying off.
The Boston-based retailer just announced a partnership with Google to co-develop the Universal Commerce Protocol, an open standard that enables seamless interactions between AI agents and retail platforms.
This move allows shoppers to purchase Wayfair products directly through Google’s AI Mode in Search and the Gemini app without leaving the platform. Importantly, Wayfair maintains control as the merchant of record to ensure consistent pricing and customer service.
Wayfair is also deploying AI across operations, using generative technology to improve product catalog accuracy and reduce duplicate processing costs by 75%. Mobile app downloads jumped nearly 40% YoY, reducing advertising expenses as a percentage of revenue.
The AI initiatives come as Wayfair navigates a challenging macro environment. Existing home sales remain at multi-decade lows, though the category has stabilized after three years of double-digit declines.
The company saw minimal consumer pull-forward behavior related to tariffs, with only brief spikes in specific categories, such as appliances and vanities, that lasted just days. Wayfair’s market share gains are driven by what management calls three pillars of growth:
- Improving the core value proposition through price, selection, and delivery speed.
- Launching new programs like Wayfair Rewards loyalty and physical retail stores.
- Leveraging its 2,500-person technology team, now freed up after completing a multi-year platform replatforming effort.
What Is the W Stock Price Target?
Wayfair expects Q4 revenue growth in the mid-single digits with contribution margins around 15%. Management expects that investments in technology will help it grow adjusted EBITDA faster than revenue in 2026, as AI capabilities mature and scale across the platform.
Analysts forecast Wayfair’s free cash flow to improve from $83 million in 2024 to $1.18 billion in 2029. Currently, Wayfair stock trades at 31.8x times forward FCF, which is not too steep given its growth estimates. If it continues to trade at 32x forward FCF, the stock should more than double within the next three years.
Out of the 32 analysts covering W stock, 17 recommend “Strong Buy,” two recommend “Moderate Buy,” and 13 recommend “Hold.” The average Wayfair stock price target is $115, which is almost matching the current price of $114.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
