Key Points
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Nvidia has been a winner investors can count on year after year.
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Today, the following consumer goods player is demonstrating its growth power -- and the story may be just beginning.
- 10 stocks we like better than Target ›
Nvidia (NASDAQ:NVDA) has been a no-brainer buy for investors over the past few years. The company, as leader in the artificial intelligence (AI) chip market, delivered explosive revenue growth quarter after quarter -- and this translated into explosive growth in the stock price too. Investors viewed Nvidia as the key to benefiting from the AI revolution, given the company's central role in the space.
Nvidia continues to march on as the AI chip giant, generating enormous revenue gains -- for example, in the latest quarter, revenue soared in the triple digits to more than $96 billion. But the tech giant is no longer among the biggest winners in the S&P 500 when it comes to stock performance. The stock has advanced about 17% so far this year, which is good, but far from the gains we've seen in the past.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
And at the same time, an unassuming consumer-related stock is trouncing Nvidia in 2026. Let's find out why this player is a no-brainer buy right now.
An exciting turnaround story
The company I'm talking about saw revenue soar in early pandemic days, as it offered consumers an easy way to shop from the comfort of their armchairs and easily pick up essentials or get them delivered. But in more recent years, this retailer saw revenue stagnate. It maintained the $30 billion in annual revenue growth it gained in about three years earlier this decade, but it struggled to make further gains. The player I'm referring to is Target (NYSE:TGT), a stock that's climbed nearly 60% so far this year.
This retail giant faced various challenges, and these weighed on revenue growth and stock price performance. But over the past several months, a turnaround has been gaining momentum. Michael Fiddelke, a longtime executive at Target, took the reins as chief executive officer early in the year and put into place a plan that's already beginning to bear fruit. Fiddelke placed a focus on employee training, a revamp of displays and product assortment, and harnessing the power of AI to improve the shopping experience. To do this, Target announced it would invest $2 billion this year.
Target's development of such a plan is a reason to be optimistic, but what confirms my sentiment is the company's recent earnings report. The retailer still has a lot of terrain to cover, of course, but it's made impressive progress in these early turnaround stages. For example, traffic growth climbed 3.6% year over year, and food and beverage sales advanced in the high single digits after the company implemented layout changes in almost half of these assortments. Beauty was also an area of strength, with sales advancing in the high single digits.
17 new stores
And it's important to keep in mind that this recovery and growth plan was launched in March, so we're in the early stages of the process. That suggests a great deal of growth could lie ahead as the company redesigns layouts, improves product assortment, and benefits from its new stores, too -- 17 opened in the recent quarter.
All of this represents a solid reason to buy Target stock. It's a quality company that is well-positioned for success down the road as its turnaround plan advances. Now here's a second reason to get in on this stock right now: Target is a Dividend King, meaning it's increased its dividend for more than 50 consecutive years. This means you can count on this player for passive income and growth in this passive income over time. The company's dividend increases suggest a strong commitment to rewarding shareholders, and Target also has the free cash flow, at about $4.5 billion, to support dividend payments.
So, when you buy shares of Target, you're getting in on a fantastic turnaround story and benefiting from passive income at the same time. It's not surprising that this unassuming stock is trouncing Nvidia this year. And all of this makes it a no-brainer buy that you'll want to hold onto for the long term.
Should you buy stock in Target right now?
Before you buy stock in Target, consider this:
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Adria Cimino has positions in Target. The Motley Fool has positions in and recommends Nvidia and Target. The Motley Fool has a disclosure policy.