Target (NYSE: TGT) reported a strong second quarter, with net sales rising 5.3% year over year to $26.5 billion. Comparable sales increased 3.8%, supported by a 3.6% gain in traffic. Digital comparable sales grew 8.7%, led by same-day delivery growth of more than 25%.
GAAP and adjusted earnings reached $4.11 per share, including a $1.65 benefit from tariff refunds. Target raised its full-year net sales growth outlook to around 5%, while adjusted EPS guidance moved to $9.90 to $10.90.
Technology is taking a larger role in Target’s growth plan to sustain that momentum.
The retailer is modernizing its technology foundation and expanding AI across personalization and merchandising. Target is also testing agentic shopping through partnerships with OpenAI, Google Gemini and other platforms.
Inside its operations, digital-twin technology is helping teams make inventory decisions, while a newly appointed Chief AI Officer will lead the company’s AI work.
Why It Matters: Target is connecting AI spending to systems that directly influence revenue and operational reliability. Its approach puts greater weight on the architecture, data and governance needed to move AI into production environments and measure its performance. The result is a model of enterprise AI adoption that connects customer-facing applications with the operational systems that support the business.
- Target Is Giving AI Dedicated Executive Ownership: The retailer recently named Chandhu Nair Chief AI Officer, giving one executive responsibility for expanding AI across the company. CEO Michael Fiddelke said Target is developing technology that can “personalize experiences across stores and digital channels” and help merchants identify trends faster. The work is occurring alongside an effort to modernize Target’s technology foundation, connecting AI development with the systems that support its retail operations.
- Agentic Commerce Is Starting to Generate Traffic for Target: Earlier this year, Target became one of a small number of retailers to initially partner with OpenAI, Google Gemini and other platforms to explore AI-powered shopping. Management said the channel remains small today. Even so, Target’s digital traffic sourced from external AI platforms is growing more than 3.5 times the industry rate compared with a year ago, creating another path for customers to discover its products online.
- Target Is Using a Digital Twin to Test Inventory Decisions Before Deployment: The company is investing in Proxima, which COO Lisa Roath described as “a digital twin of our middle mile inventory positioning system.” Teams can use Proxima to evaluate inventory-flow plans and understand potential downstream effects before changes go live. The technology supports Target’s work on product availability, where inventory reliability metrics reached multi-year highs during the quarter.
- AI-Powered Wish Lists Are Producing Measurable Results: Target introduced AI-powered teacher and college wish lists for the back-to-school season, along with personalized content on its app home screen. Wish-list creation increased more than 50% from last year, and the number of items added more than doubled. Conversion across key back-to-school pages rose nearly 20%, giving Target direct measures for evaluating the effect of these digital features on customer behavior.
- Technology Investments Are Supporting Target’s Fulfillment Network: The retailer fulfilled nearly 30% more same-day and next-day units during the quarter, while same-day delivery grew more than 25%. Stores serve as fulfillment hubs for more than 95% of Target’s sales, making store technology and inventory systems important parts of its digital operation. Target deployed approximately $2.4 billion in capital expenditures during the first half of the year, up nearly 30% from a year earlier, with spending covering stores, supply chain facilities and technology capabilities.
Go Deeper -> Target’s Earnings Report – MarketBeat
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