JP Morgan is optimistic about the retail industry in 2026: Home Depot, Inc. (HD.US), Best Buy Co., Inc. (BBY.US), and Wayfair (W.US) have been selected to the list of key focuses.

Morgan Stanley analyst Christopher Horvers conducted a comprehensive analysis of the retail industry in the current consumption environment, which is influenced by multiple factors including interest rate cuts, tariff adjustments, employment growth, accelerated wealth effects, and tax stimulus policies such as the "beautiful big law". He identified companies with outstanding potential in the turbulent investment environment. Horvers pointed out that in the first half of 2026, four positive factors are expected to "resonate", driving retail businesses centered around home goods to achieve or exceed market expectations. These factors include steady wage growth, extended product replacement cycles, and incremental net inflation benefits, which will be key catalysts for specific brands' performance improvements. At the enterprise level, Horvers highlighted the strong growth potential of Home Depot, Inc. (HD.US) and Wayfair (W.US). He observed signs of improvement in recent real estate market data, and with the dissipation of the headwinds affecting consumer spending tendencies, coupled with expectations of further interest rate cuts by the Federal Reserve, created a favorable environment for these two companies. For Home Depot, Inc., Horvers emphasized that it remains one of the "best long-term investment targets" in the retail industry, based on the company's growth initiatives, excellent corporate culture, and continued investment in store innovation; while Wayfair is expected to surpass its peers in growth due to the accelerated trend of online retail. Currently, both companies have been included in Morgan Stanley's "positive catalyst watchlist". Best Buy Co. Inc. (BBY.US), which is also influenced by the real estate market cycle, exhibits similar associative logic to Home Depot, Inc. in Horvers' analysis framework, especially in categories like appliances and televisions. It is worth noting that the replacement cycle for tablets is expected to benefit Best Buy Co., Inc. as these products account for 33% of its sales. Horvers particularly pointed out that investors may be underestimating the potential of the technology product replacement cycle, and the close relationship between Best Buy Co., Inc.'s sales and the real estate market. Horvers' analysis preceded the policy announced by President Trump on September 26, 2025 (last Friday) to impose tariffs on imported furniture, kitchen cabinets, and bathroom vanities. He believes that although additional costs may put pressure on Wayfair's profit margins, consumer demand is unlikely to be suppressed. The strong online business system of Wayfair, management's commitment to cost control, and its advantage as the largest online professional retailer in the industry with a strong product portfolio and supply chain capabilities, are expected to trigger a long-term inflection point in profit expectations. Moreover, companies are gaining a competitive advantage over their peers by optimizing platform functions through artificial intelligence and upgrading their logistics systems (such as the ecosystem built by the CastleGate logistics platform). For Home Depot, Inc., its risk exposure is lower as the company has taken significant measures to reduce its dependence on foreign suppliers, with a diverse supply chain layout sourcing most goods from the United States. This gives them flexibility in cost management and pricing strategies to effectively absorb potential price shocks, such as recent tariff policy fluctuations.