We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can AI-Driven Trend Forecasting Restore Target's Merchandising Edge?
Read MoreHide Full Article
Key Takeaways
TGT is deploying GenAI platforms to digitize trend scouting and compress product development timelines.
TGT's Trend Brain scans social and cultural signals, while synthetic audiences test designs before launch.
TGT saw early gains in Fun 101, with nearly 10% toy growth and double-digit gains in Q3 FY25.
Target Corporation (TGT - Free Report) is positioning artificial intelligence as a foundational lever in its next merchandising cycle, with the goal of restoring design-led authority across discretionary categories. Management has emphasized that future growth will require sharper cultural awareness, stronger newness frequency and faster decision-making, supported by data.
The centerpiece of this shift is Target Trend Brain, a GenAI-powered platform that captures signals from social media, cultural moments, color trends and material patterns to help merchants identify emerging styles earlier. Complementing this is TGT’s synthetic audience engine, which simulates guest reactions to new designs and campaigns before launch.
By digitizing trend scouting and compressing development timelines, these tools are designed to eliminate guesswork and improve product-market alignment. The company emphasized that merchants now have real-time insights on what is resonating not just at Target, but across the broader industry. Early traction is visible in Fun 101, where curated cultural storytelling and trend-forward assortments drove nearly 10% growth in toys and double-digit gains in video games and sporting equipment in the third quarter of fiscal 2025.
To operationalize AI at scale, Target is reshaping its organizational architecture. Headquarters staffing has been reduced by about 1,800 roles, equal to 8% of its headquarters workforce, in order to streamline decision rights and accelerate the merchant workflow. Capital spending is planned at $4 billion in fiscal 2025 and $5 billion in fiscal 2026 to support category resets, store transformations and technology modernization across the fleet.
If AI-driven trend forecasting successfully enhances assortment discipline and creative execution, Target could rebuild the discretionary authority that historically differentiated its brand. Faster trend capture, higher hit rates and smarter newness frequency could collectively revive discretionary growth and position the company for a more competitive fiscal 2026.
WMT & BBY Expand AI Initiatives as TGT Enhances Its Platform
Walmart Inc. (WMT - Free Report) is accelerating its AI efforts to deliver more personalized, multi-modal and context-aware experiences within its app in the third quarter of fiscal 2026. Walmart is also applying AI to software development — with over 40% of new code now AI-generated or AI-assisted — and to workforce development through OpenAI certifications and ChatGPT Enterprise access for associates.
In addition, Walmart is partnering with OpenAI to enable customers to purchase items directly through ChatGPT, creating a more seamless and connected shopping experience across channels.
Best Buy Co., Inc. (BBY - Free Report) continued to advance its AI-driven digital transformation in the third quarter of fiscal 2026, integrating sophisticated intelligence across customer engagement and operational processes. Best Buy used AI to streamline customer support, cutting customer contacts by 17% while boosting satisfaction scores. AI is also enhancing product search, recommendations, personalized marketing and content enrichment across digital platforms.
Furthermore, Best Buy is expanding conversational AI and agentic commerce capabilities to simplify product discovery, checkout and fulfillment, reinforcing its role as a technology-driven omnichannel leader.
Target’s Price Performance, Valuation & Estimates
TGT stock has gained 20.8% in the past three months compared with the industry’s growth of 7.4%.
Image Source: Zacks Investment Research
Target’s forward 12-month price-to-earnings ratio of 13.69 reflects a lower valuation than the industry’s average of 31.14. 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 17.7%, while the same for fiscal 2026 indicates growth of 6%. Earnings estimates for fiscal 2025 and 2026 have been southbound by 10 cents and 33 cents per share, respectively, in the past 60 days.
Image: Bigstock
Can AI-Driven Trend Forecasting Restore Target's Merchandising Edge?
Key Takeaways
Target Corporation (TGT - Free Report) is positioning artificial intelligence as a foundational lever in its next merchandising cycle, with the goal of restoring design-led authority across discretionary categories. Management has emphasized that future growth will require sharper cultural awareness, stronger newness frequency and faster decision-making, supported by data.
The centerpiece of this shift is Target Trend Brain, a GenAI-powered platform that captures signals from social media, cultural moments, color trends and material patterns to help merchants identify emerging styles earlier. Complementing this is TGT’s synthetic audience engine, which simulates guest reactions to new designs and campaigns before launch.
By digitizing trend scouting and compressing development timelines, these tools are designed to eliminate guesswork and improve product-market alignment. The company emphasized that merchants now have real-time insights on what is resonating not just at Target, but across the broader industry. Early traction is visible in Fun 101, where curated cultural storytelling and trend-forward assortments drove nearly 10% growth in toys and double-digit gains in video games and sporting equipment in the third quarter of fiscal 2025.
To operationalize AI at scale, Target is reshaping its organizational architecture. Headquarters staffing has been reduced by about 1,800 roles, equal to 8% of its headquarters workforce, in order to streamline decision rights and accelerate the merchant workflow. Capital spending is planned at $4 billion in fiscal 2025 and $5 billion in fiscal 2026 to support category resets, store transformations and technology modernization across the fleet.
If AI-driven trend forecasting successfully enhances assortment discipline and creative execution, Target could rebuild the discretionary authority that historically differentiated its brand. Faster trend capture, higher hit rates and smarter newness frequency could collectively revive discretionary growth and position the company for a more competitive fiscal 2026.
WMT & BBY Expand AI Initiatives as TGT Enhances Its Platform
Walmart Inc. (WMT - Free Report) is accelerating its AI efforts to deliver more personalized, multi-modal and context-aware experiences within its app in the third quarter of fiscal 2026. Walmart is also applying AI to software development — with over 40% of new code now AI-generated or AI-assisted — and to workforce development through OpenAI certifications and ChatGPT Enterprise access for associates.
In addition, Walmart is partnering with OpenAI to enable customers to purchase items directly through ChatGPT, creating a more seamless and connected shopping experience across channels.
Best Buy Co., Inc. (BBY - Free Report) continued to advance its AI-driven digital transformation in the third quarter of fiscal 2026, integrating sophisticated intelligence across customer engagement and operational processes. Best Buy used AI to streamline customer support, cutting customer contacts by 17% while boosting satisfaction scores. AI is also enhancing product search, recommendations, personalized marketing and content enrichment across digital platforms.
Furthermore, Best Buy is expanding conversational AI and agentic commerce capabilities to simplify product discovery, checkout and fulfillment, reinforcing its role as a technology-driven omnichannel leader.
Target’s Price Performance, Valuation & Estimates
TGT stock has gained 20.8% in the past three months compared with the industry’s growth of 7.4%.
Image Source: Zacks Investment Research
Target’s forward 12-month price-to-earnings ratio of 13.69 reflects a lower valuation than the industry’s average of 31.14. 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 17.7%, while the same for fiscal 2026 indicates growth of 6%. Earnings estimates for fiscal 2025 and 2026 have been southbound by 10 cents and 33 cents per share, respectively, in the past 60 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.