For Alexander Lee, back-to-school shopping meant spending hours comparing prices, reading reviews, and figuring out where to buy an ever-growing list of essentials for his two children. “Pens and pencils are no big deal,” Lee said in an interview with CNBC ahead of Labor Day weekend. “You have to get calculators, keys, back-to-school clothes, and if you play sports you have to get sports equipment… 30 different items can add up quickly,” he added. Mr. Lee is an accounting expert. His wife is an elementary school teacher. We have a 5-year-old and a 3-year-old preschooler who are entering the first grade of elementary school. This year, they outsourced much of their back-to-school shopping to artificial intelligence. Lee said that instead of “going through all the different reviews, different forums, Reddit,” they used AI tools like OpenAI’s ChatGPT and Anthropic’s Claude to determine which products offered the best value for their budget. Perhaps the biggest benefit is that AI can unify shopping processes that once required searching across numerous retailers. “It’s less stressful having to go to Target, Home Depot, and Costco,” Lee said. “AI has made it so much easier and helped us adjust our shopping list so we don’t have to do that.” Lee, who lives with her family in Brooklyn, said the chatbot even told her when the best deals were available. “I’m not going to wait until last month to buy if I can save 20 or 30 percent[earlier].” Most public schools nationwide will start this year before Labor Day, Monday, Sept. 7, but Lee’s first-graders will start after the holiday. New York state public schools will reopen on September 10th. Lee’s experience is increasingly becoming the norm. Artificial intelligence is playing a much bigger role in helping consumers prepare for school this year, especially as families look for ways to stretch their budgets. According to the National Retail Federation’s latest research, 61% of shoppers said they used generative AI and other AI-powered shopping tools this year to find the best prices and discounts, or ask for shopping recommendations and ideas. “The difference this year is not that parents are using AI for discovery, but that they are using AI to delegate decision-making,” said Christina Coughlin, senior vice president and general manager at creator marketing agency Trevant. “Nearly 70% of shoppers ask AI to help them find deals, compare products, and compile reviews,” Coughlin said. People have been using the Internet to compare prices and research products for decades. However, there are an increasing number of cases in which this work is outsourced to AI. For consumer companies, AI is the gateway from product discovery to transaction completion. This evolution, from consumers using AI to simply search for products to now using AI to delegate parts of the shopping process, presents an interesting opportunity for Google’s parent company Alphabet and Amazon. Especially since the big AI labs, OpenAI and Anthropic, are not publicly traded stocks yet. (Both companies are planning initial public offerings, likely by the end of the year.) “Shoppers are spending 30% to 40% more per order when shopping with AI, and the number of AI-assisted shoppers is rapidly increasing,” Aniket Deostari, co-founder and CEO of agentic commerce company Envive, told CNBC. That’s why Deostari is seeing a “huge surge” in companies looking to expand their use of AI “to make it more discoverable” for shoppers. Prior to Envive, Deosthali led the creation and launch of Walmart’s generative AI-powered shopping experience. While Google has the advantage of understanding consumer intent through its search business and AI model Gemini, Amazon relies on its vast product catalog containing years of purchase history from Prime members and, more recently, its Alexa for Shopping AI assistant. Both club names have built AI tools that can respond to complex requests and provide purchasing options that put consumers at the most important point in their shopping journey. The opportunity for Google’s Gemini Alphabet starts with what Google has been working to perfect for decades: understanding intent. The difference now is that as AI continues to get smarter, consumers no longer need to narrow their queries down to a few search terms. Consider Lee’s experience. Instead of searching individually for school supplies, children’s clothing, sporting goods, calculators, and top-selling items from various retailers, parents can give the AI assistant more detailed requests, such as: Click here for the school list. This is my budget. Here are the products I still need. Find the option that works best for you. And please tell me when to buy. Gemini AI models are improving their ability to accurately understand such long and detailed tasks. Google Chief Business Officer Philipp Schindler said on Alphabet’s latest earnings call that Gemini has “completely enhanced” Google’s ability to decipher the nuances of long searches that were previously more difficult to monetize. According to the company, Gemini improves the display of relevant ads by 20%, helping shoppers find products that match what they’re actually looking for faster. Google is closing in on the deal itself. In January, the company announced the open source Universal Commerce Protocol (UCP), designed to establish standards for agent commerce. Retailers like Target and Walmart are already using the platform. Just over four months later, Google introduced Universal Cart, an intelligent shopping cart that allows consumers to add products from a variety of retailers and purchase them in a single checkout. OpenAI announced a similar idea called Instant Checkout a few months earlier than Google. However, AI Labs withdrew that offer in March, saying, “Instant Checkout is moving to the app, where purchases can be made more seamlessly.” “OpenAI underestimated how difficult it would be to make transactions happen,” Bob Hetu, an analyst at research and advisory firm Gartner, said in an interview with CNBC at the time. Gemini surpassed 1 billion monthly active users in August, with CEO Sundar Pichai calling it the company’s “fastest growing product in history.” OpenAI’s ChatGPT exceeded 1 billion in June. Amazon’s Alexa Google knows what consumers are searching for, but Amazon already knows a tremendous amount about what consumers buy through decades of purchase history, product reviews, and pricing information. Amazon’s personalized agent assistant, Alexa for Shopping, aims to personalize product discovery through a conversational AI interface. The back-to-school example illustrates this opportunity well. Through Alexa for Shopping, consumers can take a photo of a school supply list and shop the items on it. They can tell Alexa for Shopping their total back-to-school budget and ask it to recommend products that balance price and quality. You can also set price alerts. Additionally, for certain big-ticket items, you can use automatic purchases to purchase the item when the desired price is reached. Evercore ISI’s 14th Annual Amazon Online Retail Study found the company wins on price, selection and convenience. According to a study released on August 17th, 57% of Alexa AI users said they purchased a product they didn’t previously know about. This suggests that Amazon’s use of AI should increase the amount consumers find and buy on Amazon. Evercore sees agent AI as “unlocking discovery and wallet sharing.” Conclusion The rise of AI-assisted shopping during this year’s back-to-school season could be the beginning of how consumers will evolve their purchasing habits using the latest technology. For Alexander Lee and his family, AI has been a game-changer. As AI gets smarter, we want to own stocks in companies that are best positioned to build the technology and ecosystem. For now, it’s Alphabet and Amazon. (Jim Cramer’s charitable trust is long AMZN, GOOGL. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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