Chewy (CHWY) Stock Soars 13% on Strong 2026 Revenue Outlook and AI Cost Savings

Key Takeaways

• Chewy shares climbed approximately 13% following 2026 revenue projections of $13.6B–$13.75B, surpassing Wall Street’s expectations
• Fourth-quarter revenue reached $3.26 billion, representing an 8.1% increase when accounting for the additional week in the prior-year period
• The customer base expanded 4% to 21.3 million active users; average spending per customer increased 2.2% to $591
• The company anticipates artificial intelligence initiatives will generate $50M+ in annual cost reductions by 2027, with initial savings in the “low tens of millions” projected for 2026
• The Chewy Vet Care network expanded to 18 facilities and represents the company’s fastest-expanding business line by customer spending

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Chewy delivered fourth-quarter financial results on Wednesday that aligned with Wall Street projections, though it was the forward-looking 2026 guidance that sparked significant investor enthusiasm.

Chewy, Inc., CHWY

The online pet products platform issued full-year revenue guidance ranging from $13.6 billion to $13.75 billion. This forecast exceeded the analyst consensus estimate of $13.58 billion, propelling shares approximately 13% higher during Wednesday’s session to close near $26.50.

Fourth-quarter revenue totaled $3.26 billion, representing a 0.5% increase on a reported basis and an 8.1% gain after adjusting for the calendar discrepancy with the previous year’s comparable quarter. This figure aligned with analyst projections. Gross profit margin expanded by 90 basis points to reach 29.4%, while adjusted EBITDA increased from $124.5 million to $162.3 million.

Adjusted earnings per share registered at $0.27, falling one cent short of the $0.28 Street consensus. On a GAAP basis, net income reached $39.2 million, or $0.09 per diluted share, compared to $22.8 million in the year-ago period.

The active customer count rose 4% year-over-year to 21.3 million users. Net sales per active customer increased 2.2% to $591. Chief Executive Officer Sumit Singh highlighted that pet parents are progressively viewing their animals as family members and upgrading to higher-quality, premium offerings — a behavioral shift he anticipates will persist.

Chief Financial Officer Chris Deppe clarified that the 2026 guidance assumes zero pricing inflation. Revenue expansion is projected to stem from attracting new customers alongside increased wallet share from the existing base.

Artificial Intelligence Driving Operational Efficiency

Chewy has invested in AI technology infrastructure over recent quarters and is now implementing these systems across various operational areas, including customer service, logistics networks, and distribution centers.

Singh indicated that AI-powered operational improvements are expected to generate benefits in the “low tens of millions” during 2026, scaling to approximately $50 million or greater in annualized cost savings by 2027. The retailer is simultaneously increasing capacity at its advanced fulfillment facility in Houston as part of the comprehensive efficiency initiative.

For the first quarter of fiscal 2026, Chewy projected revenue between $3.33 billion and $3.36 billion with adjusted earnings per share ranging from $0.40 to $0.45, figures that generally matched analyst forecasts.

Veterinary Services Footprint Growing

Chewy Vet Care expanded by 10 additional locations throughout fiscal 2025, elevating the total practice count to 18 facilities. CVC presently operates across five states, with strategic plans for nationwide rollout.

Singh reported that CVC performance is surpassing internal projections regarding customer satisfaction metrics and is serving as an effective customer acquisition channel that deepens relationships with premium-tier customers. Management characterized it as the fastest-expanding business segment measured by net sales per active customer.

The company also finalized its acquisition of SmartEquine, a digital platform focused on equine health management. This transaction is projected to contribute approximately $80 million in net sales during 2026 — representing less than 1% of consolidated revenue, though it demonstrates strategic diversification beyond companion animals.

Notwithstanding Wednesday’s sharp rally, Chewy stock has declined nearly 20% over the trailing twelve months and continues trading substantially below its 52-week peak of $48.62.

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