Retail earnings from Target, Lowe’s and TJX are offering fresh insight into how consumers are navigating inflation, higher living costs and shifting spending priorities. Discount retailers continue to benefit from value-focused shoppers, while home improvement demand remains uneven.
BNN Bloomberg spoke with Michelle Connell, president and owner at Portia Capital Management, about why Target’s turnaround may already be reflected in its share price, why TJX continues to benefit from consumer trade downs, and why AI-related technology spending remains a long-term investment theme.
Key Takeaways
- Target’s strong quarterly sales growth reinforced its turnaround efforts, but concerns remain about discretionary spending weakness and valuation after the stock’s sharp rally this year.
- Lowe’s continues to benefit from homeowners investing in smaller renovation projects instead of moving, though large-scale home improvement demand remains soft.
- TJX is gaining from consumers seeking lower-priced goods and from discounted inventory opportunities created by retail bankruptcies and closeouts.
- Inflation and higher household costs tied to geopolitical tensions are continuing to pressure consumer budgets and discretionary spending.
- AI infrastructure spending remains a major long-term growth theme, with semiconductor and chip-related companies expected to benefit through the end of the decade.
Read the full transcript below:
ROGER: Earnings are in this morning from some well-known retailers. Target reported its strongest quarterly sales gain in years and raised its full-year sales outlook. TJX raised its full-year outlook. Let’s get more on this now from Michelle Connell, president and owner of Portia Capital Management. Michelle, thanks very much for joining us.
MICHELLE: Thanks for having me, Roger.
ROGER: All right, let’s start with Target. Some optimism at the company with this report.
MICHELLE: Yes, it was surprising. The comps came in really strong, and it looks like their turnaround is definitely in play, but they do have another $5 billion that they need to spend this year. When you look at it, the stock is up in the premarket, and I think that may be because the stock is, or was, ahead of itself, up almost 30 per cent year to date.
ROGER: And with this, with what’s going on with it, do we? I just completely lost my train of thought. No, no, it’s not your fault, it’s mine. So where does it go from here, do you think?
MICHELLE: You know, this is obviously a really concerning time for consumers, right? And even the best consumers, whether they’re upper middle class or beyond, are shopping at Walmart and at Target. But the difference is that Target has less than 30 per cent of its sales in food, versus Walmart, which has over 60 per cent, and so that leaves a wide berth for discretionary items, and I think that may be some of the concern here. I always love Target. Full disclosure, we’ve owned it up until this point because I love it. It’s a great turnaround story. You love to go in there, and you can see everything quickly, whether you need it or not. But I think a lot of the turnaround may already be in play here, and even though they took up estimates and doubled what their expectations are for the year, I think people want to sit back a little and see how it plays out.
ROGER: All right, let’s go on to Lowe’s reporting. A beat, but guidance was weaker than expected. Where does that leave Lowe’s?
MICHELLE: Also a turnaround play, but it has not been as strong as Target. You’ve got people staying in their homes because it’s too expensive to move, and a lot of people, at least in the U.S., have low interest rates. They may want to improve and make their homes more comfortable, but they’re not going to spend a lot and redo an entire kitchen or bathroom. They’re going to do small fixes, and that’s what I think we’re seeing reflected in their comps, and their comps were almost flat, and it was pretty unexciting. What I do like about Lowe’s is they’re taking more share on the professional or tradesperson side of things, but until we see larger budgets for consumers in general, because they’re the ones hiring those tradespeople, I think we’re going to continue to have some weakness, especially with the potential for higher interest rates affecting homeowners.
ROGER: And with Home Depot’s earnings, what does this say for the bigger picture, the macro for these companies in this sector?
MICHELLE: I think it shows that the consumer is tapped out in general since the Iran conflict. The average household is having to spend at least another $400 more every month, and so how much room do you really have to spend on making things nicer in your home? Probably a lot less. Until we see some sort of resolution in the Gulf, and definitely lower food and energy prices, I think things are going to continue to be soft in home retailers like Lowe’s and Home Depot.
ROGER: All right, and then let’s segue into TJX, Winners, HomeSense and Marshalls. They reported first-quarter results that exceeded expectations, and they raised full-year guidance.
MICHELLE: They’ve been a benefactor of what’s been going on. They’re a lower-price retail store, or what’s considered more of a deep-discount retailer, and their CEO came out in March and said that they were benefiting from the closeouts and bankruptcies of other retailers. They’re swooping in and buying a lot of designer retail goods at high discounts and putting them out in their stores, and I think that’s why it’s so strong. So if you’re a family and you need to buy clothes, these are the types of stores you’re going to go to. It’s especially nice when they have great inventory that you haven’t seen in the past, and they’re benefiting from the fact that fewer of us are going to full-price retail malls. They’re able to get those goods and put them in front of their consumers, so I think you’re going to continue to see them have really strong numbers unless we head toward a recession, which we’re not close to.
ROGER: All right, and let’s go in a completely different direction. Nvidia — what can we expect from them and big tech in general? Where do you sit with that right now?
MICHELLE: I’ve also been an owner for a long time, so I need to say that, and I started off my career as a semiconductor analyst. I think they’re going to have strong earnings. When the CEO came out with the CEO of Dell recently, it sounded like they have extremely strong demand, but it’s gotten so big that that always becomes a problem. There may be some supply constraint issues as well because they can’t make the AI chips fast enough. But I’m constructive on the stock. In March, the forward price-to-earnings ratio of Nvidia was cut in half. It was a nice point to go and buy that stock, and I think in terms of its long-term outlook, it still looks compelling. I think it’s one that you want to hold in your portfolio for the long term, with the AI theme continuing to be built out through 2030.
ROGER: And bigger picture with tech?
MICHELLE: I like tech, and maybe I’m biased because I started as a tech analyst, but whether we have inflation or what’s going on in the environment, we’re going to continue to have this buildout. In 2026, we’re looking at another $2 trillion every year thereafter until 2030. That’s another $2 trillion, so that’s a total of $8 trillion. Look at the names in that space that haven’t run and aren’t terribly unreasonable. I’ve stayed away from the names that are more commodity-oriented, like Micron, that are more memory-oriented, and stuck with the companies that have something proprietary, like Nvidia, Broadcom, Qualcomm or even Taiwan Semiconductor, which owns basically all the fabrication for AI, and I think you’ll be okay.
ROGER: All right, we’ll wrap it up on that note there. Michelle, thanks very much for joining us, as always.
MICHELLE: Thank you, Roger.
ROGER: Michelle Connell, president and owner of Portia Capital Management.
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This BNN Bloomberg summary and transcript of the May 20, 2026 interview with Michelle Connell are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
