## TGT's Strategic Bet: Can $5 Billion in Tech & Store Investment Reverse Its Momentum?

**Target Corporation** [TGT](/market-activity/stocks/tgt) is making a bold move to reclaim market leadership, committing $5 billion to capital expenditure in fiscal 2026—a $1 billion jump from fiscal 2025. This isn't just spending; it's a statement about where the company sees its future. Management is betting heavily on three pillars: reimagining the in-store experience, turbocharging its digital fulfillment network, and embedding AI-powered intelligence across operations.

The transformation runs deeper than headline numbers. Target is executing its most ambitious store redesign in a decade, reshaping how customers navigate categories like Home, Baby, and specialty collections. Concurrently, the retailer is modernizing its store fleet with larger format locations that consistently generate stronger returns, signaling confidence in brick-and-mortar's role in omnichannel retail.

But here's where it gets interesting: fulfillment is being reimagined from the ground up. A Chicago pilot showed what's possible when you leverage your store network smarter—shifting order volumes to lower-traffic stores while letting busy locations focus on customer service. That model is now rolling out to 35 markets, supported by infrastructure that reaches 99% of U.S. households with two-day shipping and over 50% with next-day delivery. Same-day delivery volume jumped more than 35% in Q3, proving customers are craving faster options.

Technology is the silent enabler. Machine-learning forecasting has improved in-stock accuracy by 150+ basis points for top-performing SKUs, directly addressing a pain point that's hurt guest satisfaction. AI tools like Trend Brain are helping merchandisers spot emerging patterns faster, enabling quicker product decisions. Digital comps rose 2.4% in Q3—modest but a shift from recent weakness.

## How TGT Stacks Up Against Walmart and Best Buy's Tech Plays

**Walmart Inc.** [WMT](/market-activity/stocks/wmt) is pursuing a parallel but distinct digital strategy. Over 40% of new code at Walmart is now AI-generated or AI-assisted, showing aggressive automation of software development. The company's partnership with OpenAI—letting customers shop directly through ChatGPT—represents a channel expansion play that TGT hasn't matched yet. Walmart is also investing in associate upskilling through OpenAI certifications, building internal AI competency.

**Best Buy Co., Inc.** [BBY](/market-activity/stocks/bby) is taking another angle: doubling down on marketplace and fulfillment excellence. Its online marketplace now hosts 1,000+ sellers with 11x more SKUs than before, creating a broader assortment without carrying all inventory. App personalization and faster delivery options are reinforcing Best Buy's positioning as the tech-savvy omnichannel player.

TGT's approach feels more integrated—weaving store network optimization with digital capabilities. Whether that strategy compounds faster than competitors' will define the next cycle.

## The Valuation Question: Is TGT's Recovery Priced In?

The stock has taken a beating: down 32.5% year to date versus a 5.6% industry gain. Yet the forward 12-month PE of 11.90 sits well below the industry average of 30.13, hinting at either deep undervaluation or justified skepticism.

The earnings picture remains mixed. Consensus expects fiscal 2025 earnings to decline 17.6% year-over-year, but fiscal 2026 should see 6.2% growth. Recent estimate revisions haven't been pretty—down 12 cents and 35 cents per share respectively over the past month.

TGT carries a Zacks Rank of #3 (Hold), reflecting the market's wait-and-see posture. The $5 billion CapEx plan could be the catalyst that transforms investor sentiment, but execution will determine whether this is a genuine inflection or another false signal.