Best Buy survived Amazon. Now it has to make AI work.

• Best Buy has long survived against the odds, fending off e-commerce competition from the likes of Amazon.
• But the company's stock has struggled in recent years.
• Best Buy's newly announced CEO change shows it's getting serious about juicing returns with AI.

When I was in high school in the late 90s / early 2000s, Best Buy was the spot. My friends and I would go there to play video games, browse CDs and DVDs, and hang out in the car-audio den.

When Amazon burst onto the scene around that same time, it looked like the gig was up. Prices were lower. The selection was vast and the shipping was fast. E-commerce was an existential threat to brick-and-mortar stores of all types.

But Best Buy persevered in an environment that saw now-defunct competitor Circuit City fail. It started matching online prices, built in-store partnerships with major vendors like Apple, and invested in services like the Geek Squad. There were still legions of people who preferred the physical immediacy and human touch of a store when making expensive device purchases.

If that was Best Buy's "stay afloat" era, the late 2010s, into COVID, were its "stock explosion" era. As the chart below shows, shares soared to record highs throughout 2020 and 2021 as demand suddenly spiked for home-office products, especially computers and hardware.

In the years since, Best Buy's stock has listlessly drifted, which brings us to the present day. Current CEO Corie Barry is out at the end of October amid flagging sales growth, and new blood is coming in.

The executive shakeup finds Best Buy at a key crossroads. How does it reinvent itself (again) for the AI age? The company survived the rise of e-commerce by adapting, and it will need to do the same now.

Enter new CEO Jason Bonfig, who has overseen the rise of two key areas: retail media (advertising) and marketplace. Jefferies — which has a buy rating on Best Buy stock — praised the appointment for prioritizing the businesses, which they called "needle-moving profit engines."

And wouldn't you know it, growth for both will depend on Best Buy's ability to leverage AI. For ads, AI can improve the process for picking which customers to target, and which ads to show them. In the marketplace business, it's crucial for product discovery, seller tools, and fraud detection.

Overall, it shouldn't come as a surprise that Best Buy decided to elevate the exec who already runs two of its most AI-adjacent businesses. Now the question is if Bonfig can restore previous stock highs.

Wall Street is torn. At present time, 8 analysts rate the company a buy, 17 are neutral, and 3 have sells. In that latter camp is Goldman Sachs, which just cut its rating earlier in April, citing the upward pressure the global memory-GPU shortage is putting on device costs.

As of Wednesday's close, Best Buy stock still sat 54% below its all-time closing high from November 2021. The consensus analyst estimate is for a 14% gain by year-end. If the company is going to keep closing that gap, its AI-optimized revitalization plan has to yield results.