The AI Upgrade Cycle Is Reviving Best Buy’s Growth Story

Best Buy entered 2026 facing the same question confronting much of the consumer electronics industry: whether slowdowns in discretionary spending had become structural.

But executive commentary on the retailer’s latest quarterly earnings call Thursday (May 28) suggests the company may be finding a more durable path forward, driven by a new hardware replacement cycle centered on artificial intelligence (AI)-enabled devices, gaming and connected services.

“We are delivering on our strategy to strengthen our position in retail as a leading omni-channel destination for technology while at the same time scaling new profit stream,” Best Buy CEO Corie Barry said on Thursday’s investor call — among her last as CEO.

“With this momentum, I believe it is the right time to transition the leadership of Best Buy, and step down as CEO later this year. With his unmatched experience and focus on the customer, I know Jason Bonfig is the right person to take Best Buy into its next phase,” Barry said.

The retailer beat Wall Street expectations across the board for its fiscal first-quarter 2027, with revenue reaching $8.94 billion. Particularly notable was the return to positive comparable sales growth. Enterprise comparable sales rose 2% year over year during the quarter, reversing a 0.7% decline from the same period a year earlier and outperforming the company’s own forecast of roughly 1% growth.

For a retailer heavily exposed to discretionary consumer purchases, positive comps represent more than an accounting metric; they are an indicator that shoppers are once again engaging with higher-ticket technology purchases.

Investors responded quickly. Best Buy shares surged following the earnings release, climbing nearly 8% intraday as markets interpreted the results as evidence that the company’s turnaround efforts may be gaining traction.

See also: Best Buy Bets on AI as Consumers Avoid Big-Ticket Items

The AI Hardware Upgrade Cycle Arrives

The strongest signal within the quarter may have been where demand came from. Management pointed to strength in gaming, computing and mobile phones as the principal drivers behind the revenue beat. Those categories offset a steep 13.6% decline in appliances, a business that has struggled amid softer housing activity and cautious consumer spending on large household purchases.

PYMNTS Intelligence data suggests that consumer caution, alongside evolving payment preferences and increasingly fragmented shopping patterns are complicating how retailers define their most valuable customers.

But despite the macro challenges, Best Buy executives described the current environment as a “sweet spot” for AI-driven hardware refreshes. New laptops, premium computing devices and upgraded MacBook models have begun encouraging consumers to replace aging hardware. While generative AI has dominated software headlines over the past two years, the retail implications are now beginning to emerge at the device level. Consumers are gradually being introduced to PCs and smartphones marketed around on-device AI processing, improved battery optimization and enhanced productivity tools.

Management noted that higher tax refunds helped support spending during the quarter, particularly among middle-income consumers who remain sensitive to inflationary pressures. While tax-refund-related spending is inherently temporary, it may have amplified momentum already building around the hardware upgrade cycle.

The PYMNTS Intelligence report “The New Checkout: Crimped Consumers Lean Into Online Retail and Digital Wallets” showed that financially strained consumers remain active participants in retail spending even while changing how and where they transact.

Despite persistent uncertainty around consumer demand, Best Buy reaffirmed its full-year fiscal 2027 outlook. The company continues to project adjusted earnings per share between $6.30 and $6.60 alongside annual revenue between $41.2 billion and $42.1 billion.

See more: Three Things Now Define Retail’s Best Customers

A Retailer Reinventing Its Relevance

Best Buy’s recent performance also reflects a larger shift in how electronics retail is evolving. The traditional big-box electronics model once depended heavily on periodic television upgrades, appliance sales, and physical product browsing. Today, success increasingly depends on ecosystem participation.

That includes services like device setup, financing, warranties, subscriptions and trade-in programs. It also includes partnerships designed to embed the retailer into consumer lifestyles. Best Buy’s recent collaboration with BMO Financial Group in Canada, which offers “Tech Rewards” tied to student banking programs, illustrates how retailers are extending beyond transactional commerce into loyalty-based engagement ecosystems.

In a similar vein, retail media has become one of the most important profitability stories across modern retail. Best Buy’s ad business remains smaller than those of larger retail competitors, but it reflects the same strategic logic. Consumer electronics brands are willing to pay for visibility in high-intent shopping environments, particularly during periods of new product launches and upgrade cycles.

Similarly, the company’s marketplace initiatives allow Best Buy to expand product assortment without assuming full inventory risk. That model mirrors broader retail industry efforts to shift toward asset-lighter digital commerce structures.

The next phase for Best Buy may not be about selling more televisions or refrigerators. It may instead hinge on whether the retailer can become a central gateway for consumers navigating an increasingly AI-driven technology ecosystem.