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    Should Starbucks’ AI Cost Cuts and New Dividend Payout Require Action From SBUX Investors?

    Simply Wall St·07/11/2026 13:21:27
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    • In early July 2026, Starbucks announced its Board had approved a quarterly cash dividend of US$0.62 per share, payable on August 28, 2026, to shareholders of record on August 14, 2026.
    • Ahead of that payment, Starbucks also began a major push to build in-house artificial intelligence systems to replace certain Microsoft and IBM software as part of a US$2.00 billion cost-reduction drive.
    • Next, we’ll explore how Starbucks’ AI-led effort to replace third-party software could reshape its existing turnaround-focused investment narrative.

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    Starbucks Investment Narrative Recap

    To own Starbucks today, you need to believe the “Back to Starbucks” turnaround can translate better operations and store-level execution into healthier margins despite recent earnings pressure. The AI push to replace Microsoft and IBM tools fits the US$2.0 billion cost-reduction story, but its short term impact on the main catalyst (margin recovery) and the biggest risk (ongoing cost inflation and execution challenges) looks incremental rather than immediately transformative.

    The most relevant recent announcement here is Starbucks’ plan to build AI-powered in-house systems to cut its roughly US$400 million annual software bill, with some tools targeted for rollout by the end of next year. For a turnaround that leans heavily on improving throughput and unit economics, this move could matter if it eventually supports lower overheads and more reliable store operations, even though the benefits and risks are still early and uncertain.

    But while the AI build-out could help over time, investors should be aware that rising labor and compliance costs, combined with...

    Read the full narrative on Starbucks (it's free!)

    Starbucks' narrative projects $42.0 billion revenue and $4.4 billion earnings by 2029. This requires 3.0% yearly revenue growth and about a $2.9 billion earnings increase from $1.5 billion today.

    Uncover how Starbucks' forecasts yield a $106.25 fair value, in line with its current price.

    Exploring Other Perspectives

    SBUX 1-Year Stock Price Chart
    SBUX 1-Year Stock Price Chart

    Some of the most optimistic analysts were already assuming revenue near US$42.8 billion and earnings around US$5.6 billion by 2029, which is a far more bullish path than consensus and could look either more realistic or more stretched once the AI cost cutting rollout meets the realities of rising labor costs and market saturation.

    Explore 11 other fair value estimates on Starbucks - why the stock might be worth as much as 24% more than the current price!

    Form Your Own Verdict

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.