Adobe forecasts $253B in U.S. holiday online sales, driven by AI, discounts

Adobe projects U.S. online holiday spending will reach $253.4 billion, a 5.3% year-over-year increase, as consumers navigate inflation and tariffs by leveraging discounts, flexible payment options like Buy Now Pay Later (BNPL, up 11% to $20.2 billion), and increasingly, AI-powered shopping tools. This season is anticipated to be the "first true AI holiday," with AI chat tool traffic surging 520% YoY, highlighting evolving retail engagement and strategy. Cyber Monday is forecast to be the peak online day at $14.2 billion, with mobile devices driving over half of all online transactions.

Analysis

U.S. shoppers will spend $253.4 billion online this holiday season, up 5.3% year-over-year, according to Adobe's new forecast out Monday. Why it matters:Tariffs and inflation are squeezing budgets, but shoppers will lean on discounts, flexible payments and AI-powered tools to stretch their dollars, Adobe said. The shopping season begins Nov. 1 and runs through Dec. 31, according to Adobe, but the deals are already rolling out at the nation's largest retailers, with early holiday sales this week. The big picture: 2025 is expected to have the first true AI holiday season. Traffic from AI-powered chat tools is expected to surge 520% year over year, Vivek Pandya, a director at Adobe Digital Insights, tells Axios, noting it could rise to more than 1,000% on peak days like Thanksgiving. At the same time, social media commerce is forecast to rise 51%, with influencers driving a disproportionate share of sales. By the numbers: Cyber Monday is expected to be the biggest online shopping day of the season and year with $14.2 billion in sales, up 6.3% year-over-year. Black Friday is expected to have higher growth, rising 8.3% to $11.7 billion. Mobile will account for 56.1% of holiday spend — $142.7 billion — cementing the smartphone as the primary shopping device. Buy Now Pay Later (BNPL) is expected to drive $20.2 billion in online spend — up 11% year over year. What they're saying: "This will truly be one of the first holidays where we'll see consumers really lean on generative AI platforms," Pandya told Axios. "With discounts, we're not expecting them to be stronger than last season," Pandya said. "We're expecting them to be kind of on par, a little weaker across a couple of categories, but still quite competitive in this broader retail space." Electronics will see the steepest markdowns, with prices cut up to 28%, while toys are forecast to be discounted by as much as 27%, Pandya said. Zoom in: Electronics ($57.5 billion), apparel ($47.6 billion) and furniture ($31.1 billion) will anchor holiday shopping, together accounting for more than half of projected online spend. The fastest growth is coming from home upgrades and health tech, Adobe said. Spending on power tools is forecast to climb more than 1,060%, activity trackers will jump 1,055%, and home security systems are expected to surge 1,050% compared with average levels earlier this year. What to watch: Many of the popular holiday gift categories are vulnerable to tariffs. "Ultimately, all these retailers have to be able to drive up demand in this moment, so they're going to be looking to try to offer competitive pricing in this promotional period at a very elevated rate," Pandya said. Adobe's forecast projects a resilient U.S. consumer, with online holiday spending expected to grow 5.3% year-over-year to $253.4 billion despite headwinds from inflation and tariffs. This growth is underpinned by significant shifts in consumer behavior, most notably the increasing reliance on mobile devices, which are set to account for 56.1% of total spend ($142.7 billion). The adoption of flexible payment solutions is also a key driver, with Buy Now Pay Later (BNPL) expected to facilitate $20.2 billion in transactions, an 11% increase from the prior year. A transformative trend highlighted is the emergence of generative AI as a primary shopping tool, with traffic from AI-powered chat platforms projected to surge by 520% YoY. While major shopping days like Cyber Monday ($14.2B) and Black Friday ($11.7B) will anchor the season, the latter is expected to show stronger relative growth at 8.3% YoY. Category-specific data reveals that while electronics, apparel, and furniture remain the largest segments, the fastest growth is occurring in home upgrades and health tech, with spending on items like power tools and activity trackers forecasted to climb over 1,000% compared to pre-holiday levels. Retailers are expected to offer competitive, though not necessarily deeper, discounts to drive demand, particularly in tariff-vulnerable categories like electronics.

Key Decisions for Investors

• Given the forecasted 5.3% growth and shift in consumer behavior, investors should assess positioning in e-commerce leaders and retailers with robust mobile-first strategies and exposure to high-growth categories like home improvement and health tech.
• The sustained 11% year-over-year growth in Buy Now Pay Later (BNPL) highlights its structural importance, suggesting a favorable outlook for fintech companies specializing in this service and payment platforms effectively integrating it.
• The projected 520% surge in traffic from AI chat tools signals a new paradigm in retail engagement, warranting consideration of companies providing the underlying generative AI technology and retailers demonstrating early adoption and successful monetization of these platforms.