After a dismal year, Target is betting on AI and same-day delivery to save a broken business model
After a challenging 2025, Target Inc. (T) is leaning into convenience, including AI tools and faster delivery, in a bid to reverse slipping foot traffic and intensifying competition from lower-cost rivals.
Target’s stock largely sat out the market’s historic rally in 2025, finishing the year down more than 27%. Consumer staples also lagged the broader market but ended the year roughly flat, according to S&P 500 sector data tracked by Fidelity.
Target shares have recovered modestly in recent weeks, rising about 11% over the past month and climbing back to roughly $100 a share during the holiday season.
Analysts attributed part of that rebound to the so-called Santa Rally, noting that Target has now posted gains on the first trading day after Christmas for 10 consecutive years.
Even so, the recent bounce has done little to reverse the broader decline. Target’s stock remains down more than 60% from its post-pandemic peak, when retailers benefited from an unprecedented surge in consumer spending fueled by stimulus payments, elevated savings, and supply shortages.
As inflation, higher interest rates, and shifting consumer habits took hold, many big-box retailers struggled to sustain those pandemic-era gains.
For Target, the fallout has included workforce reductions, slowing net sales growth, and continued pressure on same-store sales.
That’s why the company is pivoting hard into AI and convenience in hopes of reshaping its fortunes in 2026 and beyond.
Target’s long road to recovery
Last year, Target expanded its same-day and next-day delivery offerings as part of a broader effort to make shopping faster for customers. The moves are intended to boost membership growth and capture spending that might otherwise go to competitors.
In May, Target expanded its same-day delivery service through Target Circle 360 membership, offering unlimited same-day orders from Target and more than 100 retailers in the Shipt marketplace, with no price markups.
Later, in September, the company expanded next-day delivery to 35 major U.S. metropolitan areas, extending faster fulfillment to a significant share of the population just ahead of the holiday season.
Target now says its same-day delivery service — powered largely by Target Circle 360 and its Shipt network — reaches more than 80% of the U.S. population.
Target is also revamping its AI strategy, rolling out upgrades to customer-facing tools, including AI-enhanced chat interfaces designed to assist shoppers with early gift discovery and product searches during high-traffic periods.
Analysts view those investments as part of a broader push to modernize Target’s digital experience and recapture market share.
As CNBC reported, the company’s AI spending comes as industry forecasts suggest artificial intelligence may have driven as much as $263 billion in global holiday sales in 2025 alone.