Can ChatGPT-Powered Shopping Drive Target's Next Digital Push?

Target Corporation TGT is rapidly expanding its use of generative AI to boost digital engagement and drive growth. In the third quarter of fiscal 2025, digital comparable sales rose 2.4% and same-day services jumped more than 35%, reflecting growing demand for seamless online shopping. With guests increasingly relying on digital tools for convenience, Target sees AI-powered interactions as a key driver of its next stage of retail innovation.

At the core of this strategy is Target’s new Gen-AI Gift Finder, an intuitive tool that translates natural-language questions into curated product suggestions. By simplifying decision-making and replicating the personalized feel of in-store assistance, Target aims to deepen engagement at the moment of discovery.

Target is also extending its push into conversational commerce through an upcoming integration with ChatGPT. The partnership will allow guests to browse, get personalized recommendations and complete multi-item purchases without leaving the conversation. It will support drive-up, pickup and two-day delivery, tapping into a fulfillment network that reaches 99% of U.S. households for two-day shipping and more than 50% for next-day delivery.

Behind these consumer-facing innovations lies a robust AI infrastructure. Tools such as Trend Brain and synthetic audiences allow teams to identify trends faster and test ideas at greater scale, while machine-learning forecasting has driven a 150+ basis point improvement in in-stock rates for the top 5,000 most-purchased items. These capabilities enhance reliability, speed and personalization across the digital journey.

The coming quarters will reveal whether conversational commerce can materially expand Target’s digital mix. Early indicators — such as nearly 50% growth in Target Plus marketplace GMV and mid-teens growth in Roundel ad sales — suggest that AI-powered shopping experiences are resonating. If Target can convert this engagement into higher conversion and larger baskets, it will unlock a stronger digital-led trajectory heading into 2026.

WMT and BBY Push AI Initiatives Forward as TGT Enhances Its Platform

Walmart Inc. WMT advanced its AI initiatives to deliver more personalized, multimodal and contextual app experiences in the third quarter of fiscal 2026. The company is also using AI to improve software development, where more than 40% of new code is now AI-generated or AI-assisted, and to help associates build skills through OpenAI certifications and ChatGPT Enterprise access. Moreover, Walmart is leveraging a partnership with OpenAI so customers can purchase items directly through ChatGPT, making shopping more seamless and connected across channels.

Best Buy Co., Inc. BBY continued to accelerate its digital transformation through significant advancements in AI and emerging technologies in the second quarter of fiscal 2026. The company introduced more than 125 AI-powered laptops and desktops — nearly 70% of which are retail exclusives equipped with CoPilot Plus capabilities. Additionally, Best Buy trained more than 16,000 experts to help customers explore AI applications and integrate smart technologies into everyday life, reinforcing its leadership in consumer tech innovation.

Target’s Price Performance, Valuation & Estimates

TGT stock has lost 35.2% year to date against the industry’s growth of 4.1%. 

Target’s forward 12-month price-to-earnings ratio of 11.43 reflects a lower valuation than the industry’s average of 29.77. TGT carries a Value Score of D.

The Zacks Consensus Estimate for TGT’s fiscal 2025 earnings implies a year-over-year decline of 17.6%, while the same for fiscal 2026 indicates growth of 6.2%. Earnings estimates for fiscal 2025 and 2026 have been southbound by 2 cents and 8 cents per share, respectively, in the past seven days.

Target currently carries a Zacks Rank #3 (Hold). 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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