Timothy Ellsbury, an Atlanta-based custom home builder, is impressed with Home Depot’s latest AI efforts to attract professionals. Mr. Ellsbury joined Home Depot’s Pro Program at the end of 2024. He told CNBC that he has considered the company’s growing suite of digital tools, including the AI-powered BluePrint Takeoffs launched in November, but has not yet implemented them. The tool quickly generates quantities and a complete list of materials and resources needed to create a project estimate, allowing contractors to purchase everything directly from Home Depot. “As they build out their programs, I see them moving from the CRM (customer relationship management) that I use to cheaper options because Home Depot is creating those resources. They’re adding it to their platform more or less for free,” said Ellsbury, 38, founder and lead developer of ERP Legacy Developments, which operates out of Home Depot’s backyard. Home Depot is also headquartered in Atlanta. “When they add tools for us, it eliminates some of the extra overhead that we have,” Ellsberry added, noting that Blueprint Takeoffs could save the company $3,300 a year. As they built the program, I found myself moving away from the CRM I was using. ERP Legacy Development Timothy Ellsberry Home Depot is aggressively pursuing pro dollars as a slower-than-expected housing market recovery weighs on stock prices. Trade Credit Systems, the hidden gem of its 2024 acquisition of SRS Distribution, gave Home Depot access to a larger contractor customer base. Trade credit allows contractors to purchase supplies and pay for them later. According to the company, BluePrint Takeoffs with the power of AI can help professionals grow their businesses. “What used to take seven, eight or more days can now be delivered to customers in one or two days,” said Michael Rowe, Home Depot’s executive vice president of professional operations. “It increases your chances of conversion. So if you’re looking for a metric, it’s going to be about conversion, because that’s what leads to bigger sales.” Lowe declined to share conversion metrics, but told CNBC that Home Depot has “significantly increased engagement with the tool” as more take-offs occur. “(We) certainly expect conversions to improve,” he said. But the real question is whether Home Depot’s new tools will lead to more profits for the home improvement retailer. Analysts are not convinced. “I don’t know if it necessarily helps margins,” said Mizuho’s David Bellinger, adding that it depends on what categories of products are sold. Home Depot’s profit margins are under pressure. “Our gross margin for the third quarter was 33.4%, flat compared to the third quarter of 2024, which was consistent with our expectations,” Chief Financial Officer Richard McPhail said on the company’s latest earnings call. For the full year of 2025, the company expects this to be approximately 33.2%. Home Depot is scheduled to report its fourth quarter results next month. Bellinger said the big-ticket items that professionals buy in bulk, such as lumber, building materials, concrete and even electronics, have low profit margins. There are often discounts for buying in bulk. But Home Depot said its professional group, which accounts for about 55% of its revenue, also buys high-margin supplies such as gloves, masks, tools and other items needed to run projects. “Depending on the mix, the impact on margins could be neutral,” Bellinger said. Ellsbury’s purchasing behavior reflects that dynamic. He spent an estimated $167,000 through Home Depot’s Pro program last year, most of it on bulk construction supplies. “That’s framing, drywall, shingles, backerboard, caulk and mud,” Ellsbury said. He also said he purchased trash bags, plumbing supplies, lighting fixtures and security equipment. Home Depot is also partnering with AI home improvement startup Kai. The initiative, an evolution of Home Depot’s Renowalk tool, allows contractors to take photos of the job site and quickly create a real-time list of Home Depot items and prices. Lowe said the Kai platform is still in test mode, but has about 40 to 50 active clients. Home Depot is pursuing professional policies against the backdrop of an unfavorable macro environment. Shares fell 11.5% last year, weighed down by rising mortgage rates. To be fair, stocks rose in late August and into September on expectations for the first Fed rate cut of 2025. Unfortunately, that rate cut, like two other rate cuts in October and December, failed to meaningfully lower long-term bond yields, which push up mortgage rates. It’s a repeat of 2024, when the Fed cut interest rates multiple times with little relief. But with President Donald Trump’s push to lower Federal Reserve rates, the stars may finally align for Home Depot in 2026. Jim Cramer said Home Depot is Investing Club’s best bet for low interest rates. President Trump is expected to name a more dovish Fed chair as Jerome Powell’s term to lead the central bank ends in May. The president may not want to wait. Powell, who was nominated by President Trump during his first term, is under federal criminal investigation in connection with a $2.5 billion renovation of the central bank’s headquarters. Powell said the investigation was a ploy to pressure the bank to cut rates. Regardless of the outcome, Trump will choose the next Fed chairman, but he will almost certainly take office with a mandate to lower interest rates. HD 1Y Mountain Home Depot 1 Year Home Depot stock is up nearly 10.5% year to date in 2026, at about $380. They received a big boost last Thursday when President Trump ordered his “representatives” Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage bonds in order to lower interest rates. The next day, the 30-year mortgage rate fell 22 basis points to 5.99%, matching its lowest level on February 2, 2023, according to Mortgage News Daily. The president said Wednesday that he wants to ban large institutional investors from purchasing additional single-family homes, which he believes will free up housing supply and improve affordability. With all of these tailwinds, Home Depot stock has now won four sessions in a row. Lower third-quarter adjusted earnings per share and same-store sales led to a sale of Home Depot stock, so on the Nov. 18 fiscal year end, the company bought an additional 25 shares of Home Depot stock at $344 per share. In addition to margin cuts, management expects continued pressure in the fourth quarter and lowered its full-year adjusted EPS outlook by 5% year over year. The company had previously expected profits to fall by about 2%. We reiterated our rating of 1, the equivalent of a “buy”, immediately after the third quarter results, but at the time we lowered our price target for Home Depot from $440 to $420 per share. This PT is about 10.7% higher than Thursday’s closing price. (Jim Cramer’s Charitable Trust is Long HD. 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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