Can TGT's AI Strategy Drive a Faster & Smarter Retail Transformation?
Target Corporation (TGT) is placing a strong bet on artificial intelligence to increase speed and precision in a retail environment that’s becoming more volatile. With the launch of its Enterprise Acceleration Office, Target aims to embed AI deeply across its operations to cut inefficiencies, speed up decision-making, and improve execution. The company is aiming for a significant leap in adaptability to changing consumer trends and competitive pressures, not just small improvements.
Already, Target is seeing tangible benefits from tech-driven improvements. In the first quarter of fiscal 2025, delivery times improved by nearly 20% year over year, same-day services increased by 36%, and inventory availability rose—all while maintaining cost discipline. These gains came largely from smarter, automated inventory allocation, optimized fulfillment routing, and shrink management, where AI and machine learning are starting to make a real difference.
AI is central to Target’s plan for scaling agility. Automating manual tasks and providing better insights frees employees to focus on higher-value work and react faster to market shifts. This agility is critical as consumer behavior grows less predictable and competitors boost their tech capabilities. Target also expects AI to enhance customer experience over time with more personalized offers through Target Circle, smarter pricing and promotions, and improved digital assortment recommendations. While investments are ongoing, Target sees AI as a core element in delivering relevance, speed, and value as retail conditions evolve.
WMT & BBY Lead on Innovation as TGT Leans Into AI
Walmart Inc. (WMT) is using AI to enhance supply chain efficiency, delivery speed, and customer experience. The company reported a 91% year-over-year surge in sub-three-hour deliveries, driven by AI-powered automation and smarter routing. AI-driven forecasting and inventory optimization help Walmart respond to demand changes swiftly and maintain a seamless omnichannel experience.
Best Buy Company Inc. (BBY) integrates AI into its digital platforms and customer service to boost engagement and operational efficiency. An AI-powered search with conversational prompts improves product discovery, while AI contributes to record customer satisfaction and reduced care costs, reinforcing Best Buy’s leadership in technology adoption.
Target’s Price Performance, Valuation & Estimates
Over the past three months, TGT stock has gained 15.9%, outperforming the industry’s 2.7% growth. Target’s forward 12-month price-to-earnings ratio sits at 13.41, significantly below the industry average of 32.13, reflecting a more conservative valuation. The company holds a Value Score of B.
The Zacks Consensus Estimate for Target’s fiscal 2025 earnings suggests a 14.8% year-over-year decline, followed by a 7.9% growth projection for fiscal 2026. Earnings estimates have been revised upward by 4 cents for 2025 and 8 cents for 2026 in the past 30 days. Currently, Target carries a Zacks Rank #4 (Sell).
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