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Is TGT's $5B CapEx Plan a Turning Point for Its Digital & Store Tech?
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Key Takeaways
Target plans $5B in 2026 CapEx to modernize stores and bolster digital and tech capabilities.
Target will expand a fulfillment model that shifts digital volumes to boost speed and ease strain.
Machine-learning forecasting and AI tools improved in-stock rates and sharper product decisions.
Target Corporation (TGT - Free Report) is entering a pivotal transformation phase, planning to raise the capital expenditure to $5 billion in fiscal 2026, about $1 billion more than that reported in fiscal 2025. This increase underscores management’s commitment to reversing recent performance softness and achieving sustainable, profitable growth. The strategy emphasizes strengthening merchandising, enhancing the guest experience and accelerating technology adoption.
A significant portion of CapEx will modernize Target’s store fleet, increasing remodels and opening additional large-format stores that consistently deliver strong returns. The company is also executing its largest floor pad redesign in a decade, creating more inspiring, navigable spaces across key categories, such as Home, Baby, and the culturally driven Fun 101 assortment.
Enhancing fulfillment is a core focus, with Target scaling a model that reallocates digital order volumes across stores based on capacity to improve speed and reduce strain. A Chicago pilot delivered notable efficiency gains by shifting shipping to lower-traffic locations while busy stores emphasized service. The company will expand the model to 35 markets, supported by a network reaching 99% of U.S. households with two-day shipping and more than half with next-day delivery.
Technology investments support Target’s operational improvements. Machine-learning forecasting boosted in-stock rates by more than 150 basis points for the top 5,000 items, improving reliability for guests. Additionally, AI tools like Trend Brain and synthetic audiences help teams identify trends faster and make more precise product decisions.
While overall growth remains modest, early signs show positive momentum. Digital comparable sales rose 2.4% in the fiscal third quarter, and same-day delivery increased more than 35%, highlighting strong demand for faster, flexible fulfillment. Successfully translating these investments into higher conversion and stronger comps can make the $5-billion CapEx plan a key turning point for Target heading into fiscal 2026.
WMT & BBY Push Digital Growth, TGT Expands Tech Capabilities
Walmart Inc. (WMT - Free Report) advanced its Digital initiatives to deliver more personalized, multi-modal and contextual app experiences in the third quarter of fiscal 2026. Walmart 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 - Free Report) advanced its digital initiatives in the third quarter of fiscal 2026 by driving app use, expanding personalization and improving online experiences, including enhanced TV shopping and faster delivery options. The company also strengthened its new online marketplace with above 1,000 sellers and 11X more SKUs, while Best Buy continued boosting fulfillment efficiency and return convenience to elevate the omnichannel journey. These enhancements reinforced Best Buy’s position as a leading tech-focused omnichannel retailer.
Target’s Price Performance, Valuation & Estimates
The TGT stock has lost 32.5% year to date against the industry’s growth of 5.6%.
Image Source: Zacks Investment Research
Target’s forward 12-month price-to-earnings ratio of 11.90 reflects a lower valuation than the industry’s average of 30.13. TGT has a Value Score of C.
Image Source: Zacks Investment Research
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 12 cents and 35 cents per share, respectively, in the past 30 days.
Image: Bigstock
Is TGT's $5B CapEx Plan a Turning Point for Its Digital & Store Tech?
Key Takeaways
Target Corporation (TGT - Free Report) is entering a pivotal transformation phase, planning to raise the capital expenditure to $5 billion in fiscal 2026, about $1 billion more than that reported in fiscal 2025. This increase underscores management’s commitment to reversing recent performance softness and achieving sustainable, profitable growth. The strategy emphasizes strengthening merchandising, enhancing the guest experience and accelerating technology adoption.
A significant portion of CapEx will modernize Target’s store fleet, increasing remodels and opening additional large-format stores that consistently deliver strong returns. The company is also executing its largest floor pad redesign in a decade, creating more inspiring, navigable spaces across key categories, such as Home, Baby, and the culturally driven Fun 101 assortment.
Enhancing fulfillment is a core focus, with Target scaling a model that reallocates digital order volumes across stores based on capacity to improve speed and reduce strain. A Chicago pilot delivered notable efficiency gains by shifting shipping to lower-traffic locations while busy stores emphasized service. The company will expand the model to 35 markets, supported by a network reaching 99% of U.S. households with two-day shipping and more than half with next-day delivery.
Technology investments support Target’s operational improvements. Machine-learning forecasting boosted in-stock rates by more than 150 basis points for the top 5,000 items, improving reliability for guests. Additionally, AI tools like Trend Brain and synthetic audiences help teams identify trends faster and make more precise product decisions.
While overall growth remains modest, early signs show positive momentum. Digital comparable sales rose 2.4% in the fiscal third quarter, and same-day delivery increased more than 35%, highlighting strong demand for faster, flexible fulfillment. Successfully translating these investments into higher conversion and stronger comps can make the $5-billion CapEx plan a key turning point for Target heading into fiscal 2026.
WMT & BBY Push Digital Growth, TGT Expands Tech Capabilities
Walmart Inc. (WMT - Free Report) advanced its Digital initiatives to deliver more personalized, multi-modal and contextual app experiences in the third quarter of fiscal 2026. Walmart 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 - Free Report) advanced its digital initiatives in the third quarter of fiscal 2026 by driving app use, expanding personalization and improving online experiences, including enhanced TV shopping and faster delivery options. The company also strengthened its new online marketplace with above 1,000 sellers and 11X more SKUs, while Best Buy continued boosting fulfillment efficiency and return convenience to elevate the omnichannel journey. These enhancements reinforced Best Buy’s position as a leading tech-focused omnichannel retailer.
Target’s Price Performance, Valuation & Estimates
The TGT stock has lost 32.5% year to date against the industry’s growth of 5.6%.
Image Source: Zacks Investment Research
Target’s forward 12-month price-to-earnings ratio of 11.90 reflects a lower valuation than the industry’s average of 30.13. TGT has a Value Score of C.
Image Source: Zacks Investment Research
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 12 cents and 35 cents per share, respectively, in the past 30 days.
Image Source: Zacks Investment Research
Target currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.