We came across a bullish thesis on GXO Logistics, Inc. (GXO) on Substack by Busy Investor Stock Reports. In this article, we will summarize the bulls’ thesis on GXO. GXO Logistics, Inc. (GXO)’s share was trading at $39.25 as of Feb 24th. GXO’s trailing and forward P/E were 35.04 and 16.21 respectively according to Yahoo Finance.
A warehouse filled with boxes of parcels, symbolizing the companies reliable logistics services.
GXO’s initial earnings reaction was negative, with the stock dropping 15%, but this appears to be an overreaction driven by short-term concerns. The company is still searching for a new CEO, which creates some uncertainty, and the Competition and Markets Authority (CMA) is still reviewing the Wincanton acquisition, though management believes regulatory approval is highly likely. Additionally, some customer capacity realignments affected Q1 results, as GXO worked with key clients to adjust their operational footprints to fit future needs. While these factors led to a temporary setback, the market quickly reassessed, with the stock rebounding 8.5% the following day. These are not fundamental issues but rather short-term headwinds that may slightly delay GXO’s growth trajectory.
Despite these concerns, GXO is delivering impressive results. The company reported 25% revenue growth, demonstrating strong momentum. Existing customers continue to expand their partnerships, as seen with more than 40 legacy clients, including Boeing, Guess, Michelin, and Nespresso, expanding into new geographies. GXO also secured a major long-term contract worth $2.5 billion in total lifetime value within the healthcare sector, a significant win stemming from its 2022 acquisition of Clipper Logistics. The Clipper deal has also accelerated GXO’s expansion in Germany, where revenue grew 60% year-over-year in 2024, making it the company’s fastest-growing market. These developments highlight GXO’s ability to capitalize on its acquisitions and strengthen its foothold in key regions.
To enhance profitability, GXO is implementing operational improvements at the site level and expects further acceleration once the Wincanton integration begins. A key driver of efficiency is the company’s proprietary AI applications, which have now been deployed across 22 instances in three key warehouse functions: proactive replenishment, SKU dimensioning, and order routing. These AI tools are already delivering substantial productivity gains, including a three- to fourfold improvement in stock replenishment for a major sporting goods retailer, a 50% boost in order allocation accuracy, and a 22% increase in carton fill rates, reducing transportation costs for an omnichannel retailer. GXO’s AI-driven enhancements are setting new benchmarks, as seen in the record-setting inbound processing of 35,000 SKUs for a new e-commerce operation.
Customer realignments in Q1 are temporary, with no customer losses—just shifts in network allocation. GXO has a history of overcoming similar short-term challenges, as demonstrated in 2022 when new start-ups caused initial disruptions but were resolved quickly. The company’s resilience and operational excellence reinforce confidence in its long-term trajectory. With strong growth prospects, expanding customer relationships, and ongoing efficiency gains, GXO remains well-positioned to deliver long-term value.
GXO Logistics, Inc. (GXO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held GXO at the end of the third quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of GXO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GXO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.