Costco Quietly Embraces AI — But Not In The Way Customers Might Expect

A report from The Federal Reserve stated that 18% of U.S. companies had adopted some AI by the end of 2025. At the same time, the Harvard Business Review has reported on frustrations with AI, including fears over return on investment. Yet Costco has become the latest major company to announce a pivot to AI. Rather than using AI to overhaul inventory systems or power customer service chatbots, Costco is using AI to improve how its products appear in AI-driven search results.

Many fast food companies are using AI, but Costco's approach is somewhat unique. In its Q3 2026 earnings report, Costco reported a triple-digit increase in AI-generated traffic, which had the highest conversion rate of any traffic source, per The Motley Fool. In other words, Costco has used AI to improve its product pages, making them easier for AI tools to understand and reference. 

This means that if you ask ChatGPT or Gemini "what's the best store for buying steaks?" or "what are the most reliable fridges to buy?" AI is more likely to prioritize linking you to Costco pages because they're optimized to be AI-friendly. It's like SEO optimization for older websites, only now it's using one AI to optimize a site for another AI.

During the Q3 earnings call shared by The Motley Fool, Costco CEO Ron Vachris said, "We believe AI is changing how consumers research products, and has the potential to be a significant opportunity for Costco." Vachris later said that AI search did a good job of showing not just products like appliances, but also value-added features like delivery, installation, and haul away. "Regular search did not show all that value," he said. The price will be shown to you, but so will much more. 

Costco believes that, as customers increasingly use AI tools for shopping searches and recommendations, structuring its website more effectively helps ensure those tools have a clearer picture of what it offers. AI optimization involves making a website clear, structured, and easy for AI tools to summarize. Basically, if a customer is searching for the best Costco frozen appetizers, the site needs to have the information in readily available bites that AI can access and share.

While this seems to be a good approach for Costco right now, there is uncertainty around relying on AI search tools. Many companies that relied on web traffic from Google searches saw their business fall sharply when Google changed its algorithm. The same thing could easily happen with AI in the future, and research already suggests people are less likely to click links through AI summary results. Hopefully, Costco is aware of the potential issues and has a plan if things go south.