Coty's Strategic Alliance With OpenAI Signals Major AI-Driven Growth Shift

Coty Inc. has entered into a strategic alliance with OpenAI to integrate advanced artificial intelligence capabilities across its global operations. The partnership centers on deploying ChatGPT Enterprise—a secure, enterprise-grade AI platform—to enhance workforce productivity while maintaining strict data protection standards. This collaboration represents more than a technology adoption initiative; it reflects Coty’s broader commitment to digital transformation as a competitive advantage in the beauty and personal care industry.

From ChatGPT to Bottom Line: How AI Transforms Coty’s Operations

The deployment of ChatGPT Enterprise will initially target specific teams, with plans to scale based on business requirements. Beyond the technology itself, Coty is implementing a comprehensive upskilling program that equips employees with practical AI competencies through structured training and hands-on engagement. This dual approach—combining cutting-edge tools with workforce development—ensures responsible and effective AI adoption rather than hasty implementation.

The company is structuring this initiative with strong governance frameworks and clearly defined guardrails, emphasizing that AI should augment human decision-making, not replace it. Early applications focus on enhancing operational efficiency, improving collaboration across departments, and enabling more informed strategic choices. Internal systems are being modernized to support cross-functional teamwork, allowing Coty’s diverse business units to operate with greater flexibility and responsiveness.

Digital Commerce Breakthrough Fuels Coty’s Upward Momentum

Coty’s e-commerce division has surpassed the $1 billion threshold in net revenues, underscoring the scale and maturity of its digital-first strategy. During the first quarter of fiscal 2026, e-commerce sales grew 5-6%, supported by sophisticated analytics, strategic pricing adjustments, and optimized inventory management across multiple regions and sales channels.

The company leverages data-driven intelligence across major digital platforms—including Amazon, TikTok Shop, and direct-to-consumer channels—to refine its go-to-market execution. Advanced inventory controls and test-and-learn methodologies are reducing friction between upstream supply-chain decisions and downstream consumer sales, while simultaneously guiding marketing investments and product launches with greater precision. This technology-enabled approach to business operations demonstrates how AI and analytics can translate into tangible commercial results.

Valuation Opportunity: Why Coty’s Stock May Be Underpriced

From an investor’s perspective, Coty presents an intriguing valuation profile. COTY shares have declined 15.4% over the past three months, underperforming the industry average gain of 12%. Despite this weakness, the company trades at a forward price-to-earnings ratio of 7.09X, substantially below the industry average of 29.64X.

The growth outlook adds further intrigue. Zacks Consensus Estimates project Coty’s fiscal 2026 earnings per share will surge 90.9% year-over-year, with fiscal 2027 expected to grow an additional 16.5%. While earnings estimates were revised downward slightly in recent days (by 1-2 cents across the two-year horizon), the underlying trajectory remains robust. COTY currently carries a Zacks Rank of #3 (Hold), suggesting the market may not have fully priced in the company’s operational improvements and AI-driven efficiency gains.

Competing Picks in Beauty Retail and Beyond

For investors seeking stronger near-term momentum, alternative options merit consideration. Ulta Beauty Inc. (ULTA) commands a Zacks Rank of #1 (Strong Buy), with consensus estimates forecasting earnings and sales growth of 0.9% and 9.5%, respectively, from year-ago levels. The retailer boasts a trailing four-quarter earnings surprise average of 15.7%, indicating consistent outperformance.

The Estee Lauder Companies Inc. (EL) holds a Zacks Rank of #2 (Buy), with projected fiscal-year earnings and sales growth of 43.7% and 4.6% respectively. Impressively, EL has delivered an 82.6% trailing four-quarter average earnings surprise—substantially outpacing analyst expectations.

European Wax Center Inc. (EWCZ) also carries a Zacks Rank of #2, with anticipated fiscal-year earnings growth of 46.7% offset by a projected sales decline of 4.3%. However, the company’s trailing four-quarter average earnings surprise of 170.2% highlights its consistent ability to exceed Wall Street forecasts dramatically.

The Next Frontier: Quantum Computing and Investment Implications

While AI dominates today’s innovation conversation, quantum computing represents the next technological paradigm shift—potentially offering even more transformative capabilities. What was once viewed as a distant research frontier is rapidly becoming operational infrastructure. Major technology providers, including Microsoft, Google, Amazon, Oracle, Meta, and Tesla, are actively integrating quantum computing into their platforms and services.

For investors seeking exposure to this emerging opportunity, Kevin Cook, Senior Stock Strategist at Zacks Investment Research, has identified seven carefully selected companies positioned to lead the quantum computing landscape. In his report “Beyond AI: The Quantum Leap in Computing Power,” Cook—who notably recognized NVIDIA’s exponential potential in 2016—has mapped out what could represent “the next major wealth creation opportunity” in the technology sector. Positioning a portfolio at the intersection of quantum advancement and near-term AI benefits may offer compelling risk-reward dynamics for forward-looking investors.