Can Home Depot's AI-powered push to court pros move the needle in its own business?
HS 16/01/2026
Timothy Ellsberry, an Atlanta-based custom homebuilder, is impressed with Home Depot’s latest AI-infused efforts to attract professionals. Ellsberry joined Home Depot’s Pro program in late 2024. He told CNBC that he has reviewed but not yet adopted the company’s expanding digital tools suite — including AI-powered BluePrint Takeoffs , which launched back in November. The tool quickly generates takeoffs — or complete material and resource lists needed to draw up project quotes — and seamlessly allows contractors to directly buy everything from Home Depot. “As they build their program, I could see myself shifting away from the CRM [customer relationship management] that I’m using to a less expensive option because Home Depot is making those resources. They’re adding it more or less for free on their platform,” said Ellsberry, 38, founder and lead developer of ERP Legacy Developments, which operates in Home Depot’s backyard. Home Depot is also headquartered in Atlanta. “When they add tools to the bucket for us, it eliminates some of the extra costs on expenses that we have,” added Ellsberry, citing potential annual savings of $3,300 if he were to use Blueprint Takeoffs. As they build their program, I could see myself shifting away from the CRM that I’m using. ERP Legacy Developments Timothy Ellsberry In the midst of a slower-than-anticipated housing market recovery, which has pressured the stock, Home Depot has been aggressively moving to capture pro dollars. The hidden gem of its 2024 acquisition of SRS Distribution, the trade credit system, has positioned Home Depot to unlock a larger contractor customer base. Trade credit allows contractors to buy supplies and pay for them later. Layering in the power of AI in BluePrint Takeoffs, according to the company, can help pros grow their businesses. “We can get things back to a customer in a day or two, where it often took us seven, eight days or more,” said Michael Rowe, an executive vice president of Home Depot’s Pro business. “Your conversion opportunity goes up. So if you’re looking for a marker, it would be around conversion because that then leads to greater sales.” Rowe declined to share conversion metrics but told CNBC that Home Depot is seeing a “nice lift in engagement with the tool” as more takeoffs are being done. “[We] certainly expect that conversion to improve,” he said. The real question, however, is whether or not Home Depot’s new tools will result in higher margins for the home improvement retailer. Analysts are not convinced. “I don’t know if it necessarily helps with the margin rates,” said Mizuho’s David Bellinger, adding that it’s dependent upon what category of items are being sold. Home Depot’s margins have been pressured. “In the third quarter, our gross margin was 33.4%, flat compared to the third quarter of 2024, which was in line with our expectations,” said Chief Financial Officer Richard McPhail on the company’s latest earnings call. For the full year 2025, the company sees about 33.2%. Home Depot is expected to report its fiscal fourth quarter results next month. According to Bellinger, big-ticket items that pros usually buy in bulk — such as lumber, building materials, concrete, and even appliances — are lower margin products. Oftentimes, the bulk purchases are also discounted. However, Home Depot said that the pro cohort, which accounts for about 55% of its revenue, also shops for higher-margin consumables like gloves, masks, tools, and other things needed to keep projects running. “Depending on the mix, the margin impact could be neutral,” Bellinger said. Ellsberry’s purchasing behavior reflects that dynamic. He spent an estimated $167,000 through Home Depot’s Pro program last year — largely on bulk construction materials. “That’s framing, drywall, shingles, backer board, caulk, mud,” Ellsberry said. Additionally, he said he did buy trash bags, plumbing materials, lighting fixtures, and security-related equipment. Home Depot is also collaborating with AI home renovation start-up Kai. In an evolution of Home Depot’s Renowalk tool, the effort allows contractors to capture photos of a job site and rapidly produce a real-time list of Home Depot items with pricing. The Kai platform is still in testing mode, Rowe said, but with about 40 to 50 active clients. Home Depot is advancing its pro agenda against an unfavorable macro backdrop. The stock fell 11.5% last year, held back by elevated mortgage rates. To be fair, the stock did rally from late August into September, in anticipation of what became the first Federal Reserve interest rate cut of 2025. Unfortunately, that cut, as well as two others in October and December, failed to meaningfully lower long-term bond yields, which drive mortgage rates. It was a repeat of 2024 when multiple Fed rate cuts provided little relief. In 2026, however, the stars might finally be aligning for Home Depot, in part, due to President Donald Trump’s push for lower Fed rates. Jim Cramer has said Home Depot is the Investing Club’s best play on lower rates. Trump is expected to nominate a more dovish Fed chair as Jerome Powell’s term leading the central bank comes to an end in May. The president may not want to wait. Powell, who Trump nominated in his first term, is under federal criminal investigation related to the $2.5 billion renovation of the central bank’s headquarters. Powell said the probe is a ploy to pressure him to lower rates. Regardless of the outcome, Trump will pick the next Fed chair, who will almost certainly enter the job with a mandate to cut rates. HD 1Y mountain Home Depot 1 year Shares of Home Depot have gained nearly 10.5% so far in 2026 to around $380. They got a big boost last Thursday when Trump ordered his “Representatives” — Fannie Mae and Freddie Mac — to buy $200 billion worth of mortgage bonds in an effort to lower rates. A day later, the rate on a 30-year mortgage dropped 22 basis points to 5.99%, matching a low from Feb. 2, 2023, according to Mortgage News Daily . On Wednesday, the president said he wants to ban large institutional investors from buying more single-family homes, which he believes will unlock housing supply and increase affordability. All these tailwinds put Home Depot stock on a four-session winning streak. We bought 25 more Home Depot shares at $344 each on earnings day, Nov. 18, as the stock sold off on third-quarter misses on adjusted earnings per share and same-store sales. Management, in addition to trimming margins, also cut its full-year adjusted EPS outlook by 5% year over year, anticipating continued pressure in the fourth quarter. They previously anticipated earnings would decline by about 2%. While reiterating our buy-equivalent 1 rating right after Q3 earnings, we did at the time lower our Home Depot price target to $420 per share from $440. That PT is about 10.7% higher than Thursday’s close. (Jim Cramer’s Charitable Trust is long HD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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