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Is HD a good stock to buy? We came across a bullish thesis on The Home Depot, Inc. on r/investing_discussion by Variant_Invest. In this article, we will summarize the bulls’ thesis on HD. The Home Depot, Inc.'s share was trading at $326.01 as of June 11th. HD’s trailing and forward P/E were 22.65 and 22.65 respectively according to Yahoo Finance.Newell (NWL) Sheds 15.15% Anew on Dismal Earnings, Outlook

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The Home Depot, Inc. operates as a home improvement retailer in the United States and internationally. HD is increasingly being viewed as a housing-sensitive retailer tied to consumer home improvement spending, but the bullish thesis argues that this characterization overlooks a significant transformation underway within the business.

Read More: 15 AI Stocks That Are Quietly Making Investors Rich

Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential

The company has been strategically shifting its focus toward professional contractors and specialty trade customers, a segment that offers larger, more recurring purchases and stronger long-term economics than the traditional do-it-yourself customer base.

Professional customers such as plumbers, electricians, and general contractors spend substantially more per visit, and Home Depot has been investing heavily to strengthen its position within this market through initiatives such as its Pro Xtra Elite program, expanded fulfillment capabilities, and an extensive store network that functions as a last-mile distribution platform. A key component of this strategy is the acquisition of SRS Distribution, which significantly broadens Home Depot’s reach into specialty categories including roofing, landscaping, and pool supplies.

These categories are supported by recurring maintenance and replacement demand, creating a more stable revenue stream that is less dependent on housing cycles or discretionary consumer projects. The market is also perceived to be underestimating the profitability implications of this transition. While professional sales generally carry lower gross margins than DIY purchases, they generate larger order sizes, faster inventory turnover, and lower labor requirements, resulting in attractive operating leverage as volume scales.

As the professional ecosystem continues to mature, Home Depot is positioned to benefit from stronger earnings growth and a more resilient business model. The thesis argues that investors are still valuing Home Depot as its legacy business rather than the emerging Pro-focused platform it is becoming. With the potential to compound earnings per share at more than 10% annually, the stock is viewed as materially undervalued, with a price target of $432 implying meaningful upside from current levels.

Story Continues

Previously, we covered a bullish thesis on Williams-Sonoma, Inc. (WSM) by Charly AI in April 2025, which highlighted margin expansion, operational efficiency, vertical integration, and disciplined capital allocation as key drivers of long-term value. WSM's stock price has appreciated by approximately 38.22% since our coverage. Variant_Invest shares a similar view but emphasizes The Home Depot, Inc.’s Pro customer transformation, specialty distribution expansion through SRS, and the resulting improvement in earnings durability and operating leverage.

The Home Depot, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 100 hedge fund portfolios held HD at the end of the first quarter which was 98 in the previous quarter. While we acknowledge the risk and potential of HD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.

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Retailers are evolving to meet the expectations of modern, tech-savvy shoppers. But many seem to be moving too slowly as their demand is lagging, causing the industry to underperform the market - over the past six months, retail stocks were flat while the S&P 500 climbed by 6.4%.

A cautious approach is imperative when dabbling in these companies as many will light cash on fire by opening new locations without the proper justifications. With that said, here are three consumer stocks we’re swiping left on.

Gap (GAP)

Market Cap: $7.87 billion

Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap (NYSE:GAP) is an apparel and accessories retailer selling casual clothing to men, women, and children.

Why Does GAP Give Us Pause?

Sales were flat over the last three years, indicating it’s failed to expand its business Lack of new stores puts a ceiling on its growth and reflects a focus on optimizing sales at existing locations Underwhelming 8.4% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $21.83 per share, Gap trades at 8.7x forward P/E. Check out our free in-depth research report to learn more about why GAP doesn’t pass our bar.

Home Depot (HD)

Market Cap: $325.1 billion

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Does HD Worry Us?

Annual sales growth of 2.3% over the last three years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 33.2%

Home Depot’s stock price of $325.93 implies a valuation ratio of 20.9x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio, it’s free.

Kroger (KR)

Market Cap: $39.28 billion

With a sprawling network of over 2,400 locations offering digital pickup services, Kroger (NYSE:KR) operates supermarkets, pharmacies, and fuel centers across 35 states, offering customers groceries, household items, and private-label products.

Why Is KR Risky?

Slow expansion of stores indicates a strategic shift toward maximizing returns from existing locations Gross margin of 23.8% is an output of its commoditized inventory Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

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Kroger is trading at $64.00 per share, or 12.3x forward P/E. To fully understand why you should be careful with KR, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

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Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge.

Home Depot (NYSE:HD) has partnered with Disney and WD-40 on a line of King of the Hill branded products. The collaboration has been linked to strong customer interest, product shortages, and a surge in related sales. This development highlights the role of marketing and brand tie ins in driving results outside of broader market and valuation themes.

Home Depot, trading at around $326.01, is often discussed in terms of sector rotations and valuation. Recent performance has also been shaped by how well the company connects with consumers. The stock is up 5.2% over the past week and 5.0% over the past month. The multi year picture includes gains over 3 years and 5 years alongside declines over the past year and year to date.

For investors watching NYSE:HD, the King of the Hill collaboration offers another lens on how the company can influence shopper behavior through branded experiences and partnerships. It also provides a concrete example to track when assessing how marketing initiatives might affect store traffic, basket size, and customer engagement beyond the usual macro narratives.

Wall Street's queuing for one rocket. While SpaceX counts down to its IPO, other companies tied to the new space race are already in orbit. → 20 Compelling Space Companies watchlist · Global Space Race Investing Ideas screener · Scan the sector by valuation on Rocket Lab's valuation page.NYSE:HD Earnings & Revenue Growth as at Jun 2026

3 things going right for Home Depot that this headline doesn't cover.

The King of the Hill partnership sits at the intersection of branding and merchandising for Home Depot. By teaming up with Disney and WD-40 on character-branded cans that quickly attracted strong demand and even local shortages, the retailer is showing how targeted pop culture tie ins can convert attention into sales. For a business that still faces slower big ticket remodel activity and macro headwinds, this type of limited run collaboration gives investors a tangible example of how Home Depot can stimulate traffic and ticket size using marketing rather than price cuts alone.

How This Fits Into The Home Depot Narrative

The success of the collaboration supports the narrative that Home Depot can deepen customer engagement and loyalty, which aligns with its focus on building a differentiated ecosystem for both DIY shoppers and professionals. If management leans too heavily on promotional tie ins to offset softer core remodeling demand, it could raise questions about how sustainable that demand is once the marketing buzz fades. The role of entertainment and licensing partners such as Disney is not a central part of the existing narrative, which focuses more on supply chain, Pro customers, and technology, so this angle may not be fully reflected in current storylines investors are using.

Story Continues

Knowing what a company is worth starts with understanding its story. Check out one of the top narratives in the Simply Wall St Community for Home Depot to help decide what it's worth to you.

The Risks and Rewards Investors Should Consider

⚠️ Reliance on short run branded promotions may not fully offset weaker demand for larger, higher margin projects if housing affordability and mortgage rates continue to weigh on big renovations. ⚠️ Licensing partnerships can increase complexity in sourcing, marketing, and inventory planning, and misjudging demand could leave Home Depot with excess stock or margin pressure. 🎁 Successful collaborations that quickly sell through can support comparable sales and show that Home Depot can still create excitement in categories where competitors like Lowe’s and Menards also compete heavily. 🎁 Strong reception to the King of the Hill products reinforces Home Depot’s ability to use brand equity and supplier relationships, including with WD-40, to differentiate its assortment and sustain shopper interest.

What To Watch Going Forward

From here, watch how often Home Depot repeats this type of branded collaboration, how broad the rollouts become, and whether management starts discussing these initiatives alongside its Pro-focused acquisitions and digital investments. It is also worth tracking whether similar entertainment tie ins appear at peers like Lowe’s or Target, which would signal how defensible this marketing angle is. Over the next few quarters, investors can monitor any commentary on traffic, basket size, and merchandising strategy to see if limited run partnerships are becoming a regular lever rather than a one off success.

To ensure you're always in the loop on how the latest news impacts the investment narrative for Home Depot, head to the community page for Home Depot to never miss an update on the top community narratives.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include HD.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Key Points

Realty Income has been paying a monthly dividend for more than 55 years without skipping a beat. Home Depot is laying the groundwork for a big comeback in a less hostile operating environment. American Express's fee-based model generates loyalty and recurring revenue.10 stocks we like better than Realty Income ›

While the SpaceX initial public offering (IPO) is firing up the market, I'll be sitting this one out. I like a top growth stock with a great story as much as anyone else, but the math here doesn't add up for me. The stock is astronomically expensive, the financials aren't compelling, and IPO stocks as a class aren't usually a great investment.

If I were looking for a great stock to buy right now, I'd be looking at sturdy dividend stocks that offer safety in an increasingly expensive market rather than hype.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

Three I'd start with are Realty Income(NYSE: O), Home Depot(NYSE: HD), and American Express(NYSE: AXP).

Image source: Home Depot.

1. Realty Income

Realty Income is a real estate investment trust (REIT). It owns about 15,500 properties globally, and it's one of the largest in the world.

It has a solid growth strategy that involves buying new properties or acquiring smaller REITs, and it has access to plenty of funds to keep the model going. It also has a long pipeline of new properties to consider, with $31 billion in sourced volume in the first quarter and a 9% selectivity rate.

It's reliable for strong performance because it predominantly leases its properties to large essentials companies like Walmart, Home Depot, and 7-Eleven. These are companies that consistently have high demand and generally perform well under pressure. Almost 80% of its properties are in retail, but it has also expanded into other industries to expand its reach and reduce risk.

Realty Income has a 98.9% occupancy rate and rarely dips below that, even during times of economic pressure. It's a model that works.

As a REIT, it pays out 90% of its earnings as dividends, and its dividend is very attractive for a number of reasons. One is the yield. At the current price, Realty Income's dividend yields 5.3%. The growth and reliability are just as compelling. It's one of the few companies that pays a monthly dividend, and it has paid it for more than 55 years without fail, an unmatched track record. It has raised the dividend for the past 115 quarters, or close to 30 years.

Realty is a top dividend stock that can provide security and passive income to any investor.

2. Home Depot

Home Depot stock continues to struggle amid the high mortgage rate environment, which has been putting home sales on hold. But considering the pressured operating climate, it's reporting sales and comparable sales (comps) increases, which is an impressive feat.

In the fiscal 2026 first quarter (ended May 3), sales increased 4.8% year over year, with comps up 0.6%. Earnings per share (EPS) were down from $3.45 to $3.30.

Everything was in line with management's expectations, and the company continues to expand and lay the groundwork for more success when the macroeconomy is more favorable. It plans to open 15 new stores this year, and recently completed the acquisition of Mingledorff's, a heating, ventilation, and air conditioning equipment distributor in five Southeast U.S. states. This gives it greater access specifically to HVAC parts, and embedding this business in its enterprise leverages its powerful distribution system to create more value for its professional customers.

It's already doing that with SRS Distribution, a pro supplies company it acquired in 2024. SRS has 1,300 branches, and together with Home Depot's core 2,360 stores and 325 warehouses, it has 16,000 delivery assets.

While the stock is down, Home Depot continues to raise the dividend, and the yield is at 2.9% today.

3. American Express

American Express continues to demonstrate resilience and momentum despite stubbornly high inflation. It has a carefully crafted and maintained model that targets an affluent clientele through a fee-based rewards program, and this clientele has more spending power in any type of economy.

The fee-based model also creates loyalty and a recurring revenue stream, as well as high profitability. In the 2026 first quarter, revenue increased 11% year over year to $18.9 billion, while EPS increased 18% to $4.28. Spend growth is accelerating, up six percentage points from last year, while retention rates remain close to 100%.

The company's emphasis on travel and entertainment is a key part of its success. While U.S. consumer services spending increased 5% over last year in the first quarter, fine hotels and resorts spending increased 50%. The focus on younger consumers is also a major growth driver, with 66% of global consumer new accounts coming from millennial and Gen-Z age groups, and 73% of global new accounts on fee-based products.

With growing net income, it has ample funds to pay and raise its dividend, which yields 1.1% at the current price.

Should you buy stock in Realty Income right now?

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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American Express is an advertising partner of Motley Fool Money. Jennifer Saibil has positions in American Express and Walmart. The Motley Fool has positions in and recommends American Express, Home Depot, Realty Income, and Walmart. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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3 S&P 500 Stocks We're Skeptical Of

The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.

Picking the right S&P 500 stocks requires more than just buying big names, and that's where StockStory comes in. That said, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.

Home Depot (HD)

Market Cap: $318 billion

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Are We Hesitant About HD?

The company has faced growth challenges as its 2.3% annual revenue increases over the last three years fell short of other consumer retail companies Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations Gross margin of 33.2% is below its competitors, leaving less money for marketing and promotions

Home Depot is trading at $318.86 per share, or 21x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio, it's free.

Snap-on (SNA)

Market Cap: $19.6 billion

Founded in 1920, Snap-on (NYSE:SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.

Why Is SNA Not Exciting?

Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy Flat earnings per share over the last two years underperformed the sector average Waning returns on capital imply its previous profit engines are losing steam

Snap-on's stock price of $378.45 implies a valuation ratio of 3.8x forward price-to-sales. Check out our free in-depth research report to learn more about why SNA doesn't pass our bar.

Regions Financial (RF)

Market Cap: $24.39 billion

Tracing its roots back to 1971 and operating in a region known as the "heart of Dixie," Regions Financial (NYSE:RF) is a financial holding company that provides banking services, wealth management, and specialty financial solutions across the South, Midwest, and Texas.

Why Does RF Worry Us?

Net interest income trends were unexciting over the last five years as its 5.2% annual growth was below the typical banking firm Estimated net interest income growth of 3% for the next 12 months implies demand will slow from its five-year trend Earnings per share lagged its peers over the last two years as they only grew by 8.6% annually

Story Continues

At $28.58 per share, Regions Financial trades at 1.3x forward P/B. If you're considering RF for your portfolio, see our FREE research report to learn more.

Stocks We Like More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

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Broward County, FLDalfen Industrial Accelerates Southeast Expansion with Fort Lauderdale Portfolio Acquisition·GlobeNewswire Inc.

DALLAS, June 10, 2026 (GLOBE NEWSWIRE) -- Dalfen Industrial has acquired a nine-building industrial portfolio totaling 419,253 square feet in Broward County, Florida, further strengthening the company's presence in one of the nation's most sought-after infill logistics markets.

Acquired at 55% replacement cost, the Broward Logistics Portfolio is currently 83% leased to nine tenants including FedEx, Event Service Group Realestate, LLC, Chromalloy Material Solutions, LLC, and Commercial Distribution Specialists, Inc. The portfolio features buildings ranging from 10,000 – 68,500 square feet, offering flexibility for a wide range of industrial users.

Strategically positioned with direct access to Interstate 95 and the Florida Turnpike, the portfolio benefits from close proximity to Port Everglades and Fort Lauderdale-Hollywood International Airport and offers strong connectivity for logistics, distribution, and trade-related users throughout South Florida. The surrounding area is home to major operators including Home Depot and Walmart.

"This acquisition reflects our continued conviction in prime infill industrial assets located in high-barrier, supply-constrained logistics markets," said Chris Segrest, SVP of the Southeast Region. "South Florida remains one of the country's strongest industrial regions, supported by population growth, port activity, and long-term e-commerce demand drivers."

Sean Dalfen, President and CEO, added, "Opportunities to acquire well-located infill industrial assets at a significant discount to replacement cost are increasingly rare, particularly in a market as dynamic as South Florida. This portfolio offers strong in-place tenancy and exit strategy optionality in one the premier logistics corridors in the country."

With this acquisition, Dalfen Industrial now owns and operates 11 million square feet of industrial real estate across the Southeastern United States, advancing the firm's strategy of investing in strategically located logistics assets nationwide.

About Dalfen Industrial Headquartered in Dallas, TX, Dalfen Industrial is a leader in last-mile industrial real estate, and one of the largest privately held industrial firms in the United States. The company specializes in strategically located infill warehouses and distribution centers, with a portfolio exceeding 60 million square feet. Learn more at www.dalfen.com.

Media Contact press@dalfen.com

An image accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/cfdc86c2-14ce-4125-ac87-8acce4e6cdd5

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The Home Depot, Inc. (NYSE:HD) was among the stocks Jim Cramer discussed during Mad Money, as he highlighted a difficult backdrop for stocks. A caller mentioned that they have held the stock since 2001 and asked whether they should add more to their position. In response, Cramer said:

It's actually one of the things, now you could say, Jim, you're not the call on this because you started buying too soon for the Charitable Trust. But I would tell you this, it yields 3%. That is a magical level for Home Depot. I think you can buy more. I know you're violating your basis, but your basis is just so low. I think that this is a good level. No one thinks that the Fed's going to cut rates, and that's why the stock is trading where it is. I think at 20 times earnings in the spring selling season, I think you got a good one.

Photo by Adam Nowakowski on Unsplash

The Home Depot, Inc. (NYSE:HD) is a home improvement retailer that sells tools, building materials, and decor. Furthermore, the company provides installation and equipment rental services.

While we acknowledge the potential of HD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years

Disclosure: None. Follow Insider Monkey on Google News.

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The Home Depot Inc.'s HD recent expansion strategy appears to be more about building scale than simply buying growth. While acquisitions such as SRS, GMS and most recently Mingledorff's have contributed to incremental revenues, management repeatedly emphasized how these businesses strengthen Home Depot's long-term position in the professional contractor (Pro) market rather than providing short-term sales gains.

The acquisition of Mingledorff's, a leading HVAC distributor in the southeastern United States, illustrates this strategy. Management highlighted that the deal expands Home Depot's reach into the approximately $100-billion HVAC distribution market and increases its total addressable market to $1.2 trillion. Mingledorff's complements SRS's existing operations and enhances Home Depot's ability to serve professional customers through specialized products, distribution capabilities and customer relationships.

Home Depot's broader vision centers on creating a differentiated Pro ecosystem. Through its network of more than 2,360 stores, 1,300 SRS branches, 325 warehouses, 16,000 delivery assets and a sales force of more than 5,000 associates, the company is building an integrated platform that competitors will struggle to replicate. Management highlighted that the real value of these acquisitions extends beyond their individual performance, as they enable Home Depot to drive cross-selling, expand customer wallet share and capitalize on its enterprise-wide logistics, sales and distribution capabilities to strengthen its position in the Pro market.

Although these acquisitions support revenue growth, Home Depot views them primarily as strategic building blocks that strengthen its competitive advantage in a fragmented Pro market. The company's focus on scale, distribution reach and service capabilities suggests that its expansion play is less about acquiring immediate growth and more about creating a comprehensive platform capable of delivering sustained market share gains over the long term.

How Are Peers Like LOW & WSM Catching Up?

While Home Depot is expanding through acquisitions and Pro-focused investments, peers such as Lowe's Companies Inc. LOW and Williams-Sonoma Inc. WSM are pursuing their strategies to narrow the competitive gap and capture a larger share of home improvement and home furnishing demand.

Lowe's expansion strategy is centered on building scale rather than pursuing growth through acquisitions alone. Management highlighted that the acquisitions of FBM and ADG are designed to establish an "interior solutions platform" serving the residential and commercial construction markets, expanding Lowe's addressable market into new-home and multifamily construction. Beyond cost synergies, the company is focused on cross-selling opportunities, Pro Extended Aisle capabilities and deeper penetration of the professional customer segment, positioning Lowe's to capture share when housing activity recovers.

Williams-Sonoma's expansion strategy is firmly focused on building scale through organic growth rather than acquisitions. Management highlighted growth across all brands, strong momentum in B2B, emerging brands such as Rejuvenation and Mark and Graham, and selective store expansion at West Elm. The company is leveraging AI, supply-chain efficiencies, personalization and brand innovation to deepen customer engagement and gain market share. Rather than buying growth, Williams-Sonoma is scaling its existing ecosystem to drive sustainable long-term expansion.

Story Continues

HD's Price Performance, Valuation & Estimates

Shares of Home Depot have lost 10.2% in the past six months versus the industry's decline of 14.7%.Zacks Investment Research

Image Source: Zacks Investment Research

From a valuation standpoint, HD trades at a forward price-to-earnings ratio of 20.81X compared with the industry's average of 18.53X.Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for HD's fiscal 2026 and fiscal 2027 earnings per share (EPS) implies year-over-year growth of 2.3% and 8%, respectively. The company's EPS estimates for fiscal 2026 and 2027 have moved down 0.3% and 0.9%, respectively, in the past 30 days.Zacks Investment Research

Image Source: Zacks Investment Research

Home Depot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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For Immediate Release

Chicago, IL – June 10, 2026 – Today, Zacks Investment Ideas feature highlights Eli Lilly LLY, Home Depot HD, Procter & Gamble PG and Starbucks SBUX.

Deja Vu? AI Overspending Fears Renew

Over the last three trading days, tech stocks, especially semiconductors and AI-adjacent names, have been crushed as investors rotated aggressively out of the sector. The Mag 7, the memory names and the broader semiconductor complex are all down sharply.

But this is not the first time. Since the AI boom kicked off in 2023, we have seen this story play out repeatedly. Each episode arrived with its own distinct headline scare, and each one, at least so far, was eventually bought.

Before getting into what's driving today's move, it's worth walking through the prior scares, because the pattern is instructive.

July–August 2024 — the monetization scare. This was the first real wobble. Google kicked off Big Tech earnings season with capital expenditures climbing sharply, and management struggled to give a clean answer on when that spending would translate into returns. Microsoft, for its part, framed AI monetization as something that would play out "over the next 15 years and beyond," not the near-term payback some investors were hoping for. The Nasdaq 100 fell more than 3% on July 24, its worst session since October 2022, and the anxiety bled into the violent early-August unwind of the yen carry trade. The core worry: the spending was unmistakably real, but the returns were not yet visible.

January 2025 — the DeepSeek shock. A Chinese startup claimed it had trained a model competitive with the leading US systems for under $6 million, using less advanced hardware. The read-through was that if frontier-level AI could be built far more cheaply, the case for hundreds of billions in GPU spending might be overstated. Nvidia lost roughly $593 billion in market value in a single session and the Philadelphia Semiconductor Index fell more than 9%, its steepest drop since the early-2020 COVID crash. Unlike the prior episode, this scare wasn't about slow returns, it was the fear that cheaper training would undercut the entire capex thesis. The selloff reversed quickly once the major hyperscalers reaffirmed their spending plans.

November 2025 — "AI bubble" fears. This one was a slower grind lower rather than a single-day crash, driven by stretched valuations and a growing chorus of skeptics. Michael Burry, of "The Big Short," argued that the hyperscalers were flattering their earnings by understating depreciation, extending the assumed useful life of AI chips and servers that, in his view, become obsolete far faster. The Nasdaq logged its worst week in months as institutional surveys showed a majority of investors believed AI stocks had become a bubble. The accounting angle made this a more sophisticated version of the bear case than earlier rounds.

Story Continues

Late January–February 2026 — the capex-guidance rout. This was the largest aggregate wipeout. A cluster of mega-caps shed well over $1 trillion in combined market value in a single week as fourth-quarter earnings revealed staggering capex plans, as Amazon alone guided to roughly $200 billion in infrastructure spending, a 56% jump and the highest commitment among the hyperscalers. A new fear joined the familiar one: not only was capex outrunning the cash flow funding it, but investors began to worry that AI itself was beginning to cannibalize the established software companies, the very names that had been considered safe AI winners.

An observation of my own: after years of watching markets, you'll notice these narratives often get assigned to the price action after the fact. Nothing in global markets happens in a vacuum, and prescribing a single tidy story to a selloff, while helpful for simplification, can be unhelpful for understanding the broader setup. Look closely and each of the four episodes above was triggered by a different worry, but each time an extended market that snaps its streak reaches for whichever AI-skeptic story best fits the tape that week.

Consider what else was happening underneath each "AI" selloff. The July–August 2024 drawdown is remembered as the "AI fatigue" trade, but the real violence came from the Bank of Japan's surprise rate hike unwinding the yen carry trade and a weak jobs report that tripped a recession indicator. The January 2025 DeepSeek shock hit a tape already on edge over a hawkish Fed, a 10-year yield near 4.7%, and fresh tariff threats. And the November 2025 "bubble" scare, while more genuinely valuation-driven, still rode on an unsettled Fed path and stretched positioning after a long summer melt-up. The AI story was the most quotable explanation each time, but it was hardly the only one.

That observation deserves its own deeper treatment, which we won't attempt here, but it's worth keeping in mind whenever a clean explanation gets attached to a messy move. Ultimately, markets move lower because there are more sellers than buyers, which is often an unsatisfactory explanation.

Other Factors Moving the Stock Market

In the current case, several variables are at play beyond the AI-spending headline.

Equities, tech and AI especially have been on a powerful run since the March lows that followed the onset of the US–Iran conflict. That rally pushed sentiment to heavily bullish extremes, and stretched positioning is precisely what leaves a market vulnerable to a sharp, fast reversal. When nearly everyone is already long and leaning the same way, there are few buyers left to absorb selling once it starts.

At the same time, interest rates have been grinding higher, pressured from two directions. Higher oil prices, a byproduct of the geopolitical backdrop have revived inflation concerns, while consistently robust labor market data has reduced the case for near-term rate cuts. Together, those forces put upward pressure on yields and raise the prospect of a less accommodative Federal Reserve.

As far as I can tell, last Friday's strong employment report was the initial catalyst, by pushing rate expectations higher, while the renewed AI-spending fears added fuel to the fire. Overextended positioning then did the rest, leaving the tape vulnerable to a negative feedback loop of selling, which is what we are seeing today.

The Bear Case for AI Stocks Isn't Unreasonable

While I doubt this marks the end of the AI boom, it would be a mistake to dismiss the bears. They are raising legitimate points.

The sheer scale of the spending. More than $1 trillion has been poured into AI through data-center infrastructure and capital raised for the model labs — OpenAI, Anthropic, and others. For 2026 alone, the major hyperscalers have collectively guided to somewhere in the range of $600–700 billion in capital expenditures.

The opacity around returns. There is real uncertainty about the return on investment in these data centers, and the economics of actually running the models are murkier than they appear. When you pay a monthly subscription to an AI provider, the cost of serving your prompts may well exceed what you're paying, meaning the usage is being subsidized by an unknown amount. Loss-leading is not a new strategy, as several of the Mag 7 built their dominance by absorbing losses to capture markets first. But it has never been attempted at anything close to this scale, and the path to sustainable margins remains undefined.

The circularity. A growing concern is how interlinked the major players have become. Nvidia has invested in "neocloud" providers, companies that rent out GPU computing power, which in turn use that capital to buy more Nvidia chips. Nvidia has also committed to invest heavily in OpenAI, which has pledged to spend enormous sums on the very compute that flows back through the ecosystem. Supporters frame this as a "virtuous circle" that locks in scarce supply and critics see it as a web of interdependent commitments where a stumble at one node could cascade through the whole structure.

The coming mega-IPOs. A wave of richly valued, deeply unprofitable companies, the likes of SpaceX, Anthropic, and OpenAI are coming to public markets. By entering the major indexes while still burning cash on opaque business models, they could introduce fresh vulnerability for passive investors who hold them by default. Viewed cynically, the whole sequence can look like an opportunity for venture capital and other early backers to cash out at the top before any unraveling.

These are all reasonable concerns, but it's worth being precise about what they rest on: the assumption that data-center investment is structurally unprofitable. That is largely true today. It is far less clear that it will remain true. The margins on AI infrastructure are still being discovered, and history with prior technology buildouts suggests that early-stage unprofitability is not the same thing as permanent unprofitability. The honest position is that the verdict is genuinely unknown, which is exactly why the tape whipsaws on every new data point.

Which Stocks Are Capturing the Flows

As money has come out of tech, it has been finding a home in the more defensive and beaten-down corners of the market. Today we're seeing real estate, consumer staples, healthcare, and some left-for-dead retail names catch a bid. Among the more interesting movers are Eli Lilly, Home Depot, Procter & Gamble andStarbucks, among many other established, cash-generative businesses that had been largely ignored while capital chased AI.

I'm not prepared to call this the start of a durable resurgence in these names, but the logic tracks. Most data points to a broadly healthy US economy even as investor attention has been monopolized by AI. If the economy continues to hold up, these unloved areas \could absorb a meaningful share of the flows rotating out of crowded tech.

This may raise more questions than it answers, and that's fine. Identifying the current environment is a more tractable task than predicting the future, and good portfolio management sometimes simply requires being appropriately defensive for the conditions in front of you today.

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Key Points

The AI craze has left several prominent stocks in other industries on the bargain rack. Consumers drive the economy -- iconic brands across staples and discretionary markets have become dividend stalwarts. This list covers real estate, fast food, household goods, home improvement, and healthcare.10 stocks we like better than Realty Income ›

The artificial intelligence (AI) boom has defined the stock market since early 2023. AI and other technology stocks have been the big winners more often than not over that time, but the AI trade won't work forever. Eventually, the market will zig and zag as it tends to, and new stocks in other industries will have their moment.

Nobody knows when that time may come, which is why it's so important for long-term investors to diversify their portfolios. A portfolio of 50 or so high-quality companies across all the market sectors can build serious wealth over time and endure the market's inevitable unpredictability. That could mean adding some dividend stocks from non-tech sectors to balance things out.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

Here are five blue chip dividend stocks to consider buying and holding in case the AI trade ends.

Image source: Getty Images.

1. Realty Income

Real estate is a classic income-generating investment. Realty Income(NYSE: O) is a leading real estate investment trust (REIT) that acquires and leases real estate and distributes most of its cash profits to investors as dividends. Realty Income specializes in retail properties, such as restaurants and convenience stores, but has expanded into other property types in recent years, including casinos and industrial properties.

Realty Income pays a monthly dividend, which is somewhat uncommon, and the company has increased the payout for more than 30 consecutive years. Raising dividends during recessions and the COVID-19 pandemic speaks to the company's resilient rental income streams. The stock currently yields 5.3%, and that dividend can do wonders over time when investors reinvest it for more shares.

2. McDonald's

Investors won't find a more iconic franchise business than McDonald's(NYSE: MCD). The world's largest restaurant chain has more than 45,000 locations in more than 100 countries, which generate steady revenue for the company through royalties and franchise fees each location pays. Consumers tend to associate the brand with value, so McDonald's tends to hold up better than most restaurants during recessions.

McDonald's continues to pay and increase its dividend to shareholders. Now with 49 consecutive annual dividend hikes, McDonald's is on the cusp of becoming a Dividend King, a company with at least five decades of uninterrupted dividend growth. Investors looking for a simple business that continues to churn out steady growth should take a close look here.

3. Clorox

Home products are one of the most underrated but consistent market segments. The Clorox Company(NYSE: CLX) is among a handful of companies that sell some of the most trusted consumer brands, including Clorox, Purell, Glad, Hidden Valley Ranch, Burt's Bees, Brita, and Kingsford. These are products people tend to buy and use regardless of the economy, and they tend to buy these brands because they know them.

Clorox's current dividend growth streak sits at 48 years, making it another soon-to-be Dividend King. Since the pandemic, Clorox has struggled with high costs and a cybersecurity breach. The stock price has tumbled, and the dividend yield is up to 5.2%. But Clorox still earns enough to cover its dividend, and the recent Gojo acquisition (Purell) should boost earnings growth.

4. Home Depot

Housing is one of the U.S. economy's prominent consumer markets, which has helped make Home Depot(NYSE: HD) one of the world's most successful retailers. People tend to invest in their homes, and that includes the maintenance and upkeep virtually every house needs. Home Depot stores blanket the United States, which has helped the company adapt to e-commerce by using its stores as a distribution network.

Home Depot returns much of its cash profits to shareholders through dividends and stock buybacks, a formula that has produced life-changing total investment returns over its lifetime. The stock is down right now due to a slow housing market and consumers struggling with rising living expenses. While housing may fluctuate, it's arguably an evergreen market. Investors should look into buying the stock on its current dip.

5. Medtronic

Healthcare is another forever market. People always need care, and there's an ongoing pursuit of newer and better ways to treat patients. Medtronic(NYSE: MDT) is one of the world's leading healthcare companies, with a broad range of medical products and equipment across cardiovascular, neuroscience, and general surgery applications. Medtronic's decades of success have made the stock a soon-to-be Dividend King, poised for its 50th consecutive annual dividend increase next year.

The company recently spun off its diabetes business segment as MiniMed to reignite growth and entered the robotics-assisted surgery market in the U.S. after its Hugo platform received FDA approval in December 2025. Shares offer a starting dividend yield of 3.5% and trade at less than 14 times 2026 earnings estimates. Analyst estimates of 6% to 7% annualized earnings growth over the coming years make Medtronic a bargain at this price.

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Justin Pope has positions in Clorox and McDonald's. The Motley Fool has positions in and recommends Home Depot, Medtronic, and Realty Income. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.