Target Doubles Profit, Raises Guidance, and Investors Shrug While AI Stocks Keep Bleeding

Target actually did what it said it would do.

The retailer's second-quarter results, released Wednesday, blew past Wall Street's numbers. Net sales rose 5.3% year-over-year to $26.5 billion, beating the $25.5 billion analysts expected, according to Yahoo Finance. Adjusted earnings per share hit $4.11, more than double last year's figure and way above the $2.30 estimate, according to Crypto Briefing. Gross margin jumped 470 basis points to 33.7%.

Target didn't just beat the quarter. It raised the bar for the rest of the year. Full-year EPS guidance now sits between $9.90 and $10.90, up from a prior range of $7.50 to $8.50, with net sales growth projected at 5%, according to Crypto Briefing.

CEO Michael Fiddelke told Yahoo Finance he's "encouraged" by the turnaround, crediting a merchandising overhaul that included 3,000 new beauty products across 60 brands, a reset of 75% of home decor, and a back-to-school lineup that's more than half new. Jefferies analyst Corey Tarlowe called it one of the broadest assortment refreshes in years and said the market may be underestimating how durable the traffic gains could be.

Target has also cut prices on 10,000 items, mostly food, to compete head-on with Walmart and Kroger. Fiddelke said more cuts are coming. This is a company fighting for market share with actual price competition.

Sales grew across every merchandise category, led by beauty and food, and store traffic increased. After two brutal years, this represents a real turnaround. Yahoo Finance noted this marks the second straight quarter of beat-and-raise performance for Target.

Despite all that, Target shares closed up less than 1% Tuesday at $152.48, and Yahoo Finance flagged that the stock actually fell after the report despite the beat. Wall Street wanted the win, got it, and still didn't reward the stock much. Good news gets priced in fast, and investors are watching bigger fires elsewhere.

Those bigger fires are in AI and chips.

The broader market has been sliding for three straight sessions. The S&P 500 fell 0.7% Tuesday to 7,691.76, the Dow dropped 0.2% to 53,343.40, and the Nasdaq composite sank 1.3% to 26,289.71, according to the Associated Press via the Epoch Times. Nvidia, Micron Technology and Broadcom were named as some of the heaviest drags, with critics saying AI stock prices ran too far, too fast.

Investor's Business Daily reported that Sandisk, Micron and Credo led the chip and AI hardware sell-off, with many of those names diving back below key technical levels just after reclaiming them. For the week, the S&P 500 is down 1.2%, the Dow is down 0.7%, and the Nasdaq is down 1.6%.

Zoom out and the picture is still strong for the year. The S&P 500 is up 12.4% in 2026, the Dow is up 11%, and the Nasdaq is up 13.1%, according to the Epoch Times. Nobody's panicking about a lost year. They're panicking about a hangover after a party that got a little too wild.

Some market watchers argue the AI trade got ahead of actual earnings and cash flow, meaning valuations baked in years of perfect execution that hasn't happened yet. Ray Dalio has publicly warned the AI buildout could end like 1929 or the dot-com bust, according to reporting referenced by Benzinga on TradingView. Booking Holdings dropped 6.1% on results that actually beat expectations, according to Breitbart, purely on fears that AI competitors could eat its business. When a company beats and still gets hammered because of what might happen to it, investors are pricing in real structural anxiety.

Adding to the jitters: rising Treasury yields, a potential U.S.-Iran conflict pushing oil prices toward their highest levels since early August, and market unease over private-credit lenders exposed to AI-adjacent companies, according to Breitbart's reporting on Asian markets. Japan's Nikkei fell 1.1% partly on worries about lenders like Blue Owl Capital, which lost 5.9% in one session.

Markets are waiting on the Federal Reserve's August FOMC meeting minutes, and prediction markets tracked by TradingView show traders nearly split on whether Wednesday's session opens up or down. Crypto Briefing noted that prediction markets are pricing a 27% chance of a Fed rate hike at the September meeting, down from 37% a week earlier, with the October probability at 38.5%.

Target proved a retailer built its recovery on cutting prices and fixing its shelves, not financial engineering. The AI trade still has to prove its trillion-dollar bets turn into trillion-dollar profits. Those are two different tests, and only one of them got passed this week.