Can TGT's AI Strategy Drive a Faster & Smarter Retail Transformation?

Target Corporation TGT is betting on artificial intelligence to help it move with greater speed and precision in an increasingly volatile retail environment. Through its newly announced Enterprise Acceleration Office, the company plans to embed AI more deeply across its business to eliminate inefficiencies, accelerate decision-making and strengthen execution. 

Management has made it clear that the intent is not just incremental improvement but a step-change in how quickly the company can adapt to evolving consumer trends and competitive pressures.

Target is already seeing benefits of technology-led improvements in its operations. In the first quarter of fiscal 2025, the company improved delivery times by nearly 20% year over year, boosted same-day services by 36%, and achieved higher inventory availability, all while keeping costs disciplined. Much of this progress came from smarter, automated inventory allocation, fulfillment routing and shrink management — areas wherein AI and machine learning are starting to deliver real impacts.

TGT views AI as critical to unlocking agility at scale. By automating manual processes and surfacing better insights, the company can free up employees to focus on higher-value activities and respond faster to market changes. This is particularly important as consumer behavior becomes less predictable and competitors invest in similar capabilities.

Target also expects AI to improve the customer experience directly in the longer term through more personalized Target Circle offers, smarter pricing and promotions, and better digital assortment recommendations. While investments are ongoing, the company believes that AI will be a cornerstone of its transformation, helping it deliver relevance, speed and value in a fast-moving retail landscape.

WMT & BBY Lead on Innovation as TGT Leans Into AI

Walmart Inc. WMT is increasingly leveraging artificial intelligence to improve its supply chain, delivery speed and overall customer experience. The company has seen significant growth in sub-three-hour deliveries, which surged 91% year over year, driven by AI-powered automation and smarter routing at Walmart.

By using AI-driven forecasting and inventory optimization, Walmart continues to adapt to demand shifts, enhance efficiency, and sustain a seamless and competitive omnichannel retail experience.

Best Buy Company Inc. BBY is embedding artificial intelligence into its digital platforms and customer service to boost engagement and efficiency. An AI-powered search with conversational prompts improves product discovery at Best Buy. The company also credits AI for record satisfaction and lower care costs, reinforcing Best Buy’s technology leadership.

Target’s Price Performance, Valuation & Estimates

The TGT stock has risen 15.9% over the past three months compared with the industry’s growth of 2.7%.

Target’s forward 12-month price-to-earnings ratio of 13.41 reflects a lower valuation compared with the industry’s average of 32.13X. TGT carries a Value Score of B.

The Zacks Consensus Estimate for TGT’s fiscal 2025 earnings implies a year-over-year decline of 14.8% and the same for fiscal 2026 indicates growth of 7.9%. Estimates for fiscal 2025 and 2026 have been upbound 4 cents and 8 cents, respectively, in the past 30 days.

Target currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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