This probably will not go over well with the union. Coffee giant Starbucks (SBUX) has an exciting new tool in its toolbox, a tool that will potentially destabilize food retail for some time to come. Starbucks calls it the “AI barista,” and it will apparently be able to predict your order before you even show up to place it. Investors were intrigued, and sent shares up nearly 2% in Tuesday afternoon’s trading.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Brian Niccol, Starbucks CEO, went to the Dreamforce event—Salesforce’s (CRM) annual event—to talk about Starbucks’ experimentation in artificial intelligence. We had already heard about systems that allow baristas to rapidly look up the process for making any drink, but Niccol went a step farther, suggesting that the future will feature AI-driven baristas that can predict that order before you even walk in the door. How it works is unclear, but big data operations have been trying to predict such things for years now.
Of course, Starbucks was in no hurry to replace its baristas, though such a tool—coupled with some other tools currently in development or even available now—could basically remove the barista entirely from the picture. But a Starbucks representative pointed out that the tools were meant to “assist” employees rather than “replace” them. Niccol himself noted that Starbucks is “…not near” a completely automated concept yet.
Speaking of the Union
This development is likely going to be a serious blow to Starbucks Workers United, the union that handles at least some Starbucks employees. But the union is not taking this lying down, and is turning to the Olympics to drop Starbucks as the “official coffee partner” of the games.
The union pointed out the treatment it has suffered at Starbucks’ hands, and also pointed out “…allegations of forced labor abroad” as reasons to drop Starbucks from the partnership rolls. Starbucks, for its part, denies the accusations the union has made, and plans to build a “specially-designed coffeehouse” to cover both Olympic and Paralympic villages.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, six Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 12.69% loss in its share price over the past year, the average SBUX price target of $100.94 per share implies 17.14 % upside potential.
