Chewy Puts a $50 Million Price Tag on AI Productivity

Chewy executives said they expect AI to take about $50 million out of its costs in fiscal 2027, up from the low tens of millions this fiscal year. CEO Sumit Singh told analysts he has high confidence in both figures. Most of the savings come from tools customers never see. AI pulls answers together for service agents, checks pharmacy data and books appointments at Chewy’s vet clinics. Chewy spent several quarters getting its data right before it launched an AI assistant. Its new customer assistant, Cai, already resolves about 30% of chats without a human agent.

Chewy CEO Sumit Singh said on the company’s second-quarter earnings call that Chewy expects AI to reduce its costs by about $50 million in fiscal 2027, up from the low tens of millions of dollars this fiscal year. Asked how confident he was in those figures, Singh said he has high confidence. The savings come from customer service, pharmacy, veterinary care and tools for employees. Singh said the tools are past the experiment stage. They lower Chewy’s cost to serve in a way that lasts. Chewy launched Cai, an AI assistant, to a select group of mobile app users during the quarter. Singh said Cai had been live less than a month and had reached less than 15% of Chewy’s traffic. It handles the most common requests, which cover orders, returns, autoship and account management. About 30% of those chats ended without a human agent. A customer who wants a person gets a care team member within seconds. More of the work is internal. Chewy’s service agents use many software systems, and new AI tools pull the answers together for them. Singh said that brings new agents close to the performance of experienced ones. In pharmacy, AI extracts and validates data and makes reviews more consistent. That lowers the cost to pick, pack and ship a pharmacy order. At select Chewy Vet Care clinics, a voice agent named Callie confirms appointments, schedules visits and handles routine follow-ups. Automation carries part of the load. More than half of Chewy’s volume flows through automated facilities, Chief Financial Officer Chris Deppe said. Lower variable cost to serve was the largest contributor to the quarter’s SG&A leverage.

Singh said Chewy spent several quarters building infrastructure and getting its data right before it shipped the assistants. Cai runs as several agents under an orchestrator, with automated returns and refunds built in. Chewy built all of it itself. That gives Chewy a lasting advantage because other companies would need years to reach the same point or would have to work through third-party providers.

Singh told analysts not to stack the $50 million on top of Chewy’s fiscal 2026 margin path.