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How Target let Walmart steal its rizz

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Good morning. When Brian Cornell took the reins at Target 11 years ago, the retailer was, to put it mildly, a mess. Among its many problems: Target was struggling with out-of-stocks that frustrated shoppers, employee morale was low, and there was a sense that the retailer had lost much of the “Tar-zhay” cheap-chic magic that had won it millions of loyal, fanatical shoppers for decades.

So it’s disappointing for fans to see that same shopping list of problems plaguing Target again. Sales have been in decline for three years now, and the stock has plunged 64% from its all-time high in 2022.

It didn’t have to be this way. At the start of his tenure, Cornell, who the company announced yesterday will step down as CEO on February 1, was an outsider unafraid to move fast and break things. He had been CEO of a big PepsiCo unit, Michaels Stores, and Sam’s Club before that.

As I detailed in a 2015 cover story, he quickly ended Target’s ill-advised Canada expansion to focus without distraction on a struggling U.S. business, assembled an A-team of merchants to re-energize Target’s store brands (for a while, Target was launching billion-dollar brands on a monthly basis) and changed Target’s insular culture.

And in March 2017, in perhaps his boldest move, he announced a $7 billion multi-year program to remodel its physical stores, making them more inviting but also equipping them to support e-commerce pick up and delivery at a time investing in physical stores was seen as folly given Amazon’s ascendance.

Wall Street pummeled the stock but Cornell had the last laugh. Target soared for years, building a huge digital business, and taking market share from department stores. It was also well-positioned with its curbside pickup and improved grocery when the pandemic struck to be one of retail’s big winners alongside Walmart and Costco. Indeed, sales rose 20% in 2020 and the following year, revenue passed $100 billion for the first time.

By that point, Cornell had been in the post for eight years, roughly the average tenure of a Fortune 500 CEO. But rather than hand on the baton, he signed on for another three years through 2025. Unfortunately, inertia set in. Shoppers felt Target lost its edge. Millions defected. Meanwhile, Walmart swooped in to take market share with its suddenly hipper apparel and home goods offerings. (The whole contretemps around DEI was also an unforced error that hurt morale.)

Cornell had a great run overall, but like many CEOs seems to have misjudged the moment when it’s time to move on. (And he’s not really going away– he will stay on as executive chairman indefinitely.) Though Wall Street had been hoping for an outsider to take the reins, Target’s former COO Michael Fiddelke got the nod. He’ll have his work cut out for him. But perhaps the lesson here is, even successful CEOs have a shelf life.—Phil Wahba

Top news

The Fed is more concerned about inflation than jobs

U.S. Federal Reserve officials were more concerned about the inflationary impact of President Trump’s trade tariffs than signs of weakness in the job market, according to the minutes of their last meeting. The Fed meets at Jackson Hole today. Chair Jerome Powell will make a closely watched speech on Friday.

Fed governor accused of mortgage fraud

Federal Reserve governor Lisa Cook was accused of mortgage fraud and referred for criminal prosecution by Federal housing regulator Bill Pulte. He said she “has falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statutes.” Cook is accused of taking out loans on properties in Michigan and Atlanta and claiming that both were her principal residence. Context: The Trump administration is trying to end the Fed’s economic independence and bring it under political control. Powell has also been referred for a criminal probe, baselessly, over his remarks to Congress.

Meta reorganizes its “superintelligence” unit

Meta is doubling down on its so-called race to “superintelligence,” reshuffling its AI organization once more as its new Meta Superintelligence Labs group takes shape. But analysts say investors are keeping their eye on the prize Meta has always promised: improved products that increase engagement and, in turn, sell more ads. Superintelligent AI models, if they arrive, are just a means to that end. former Scale AI CEO Alexandr Wang is leading the reorganization.

China moved against Nvidia after “insulting” remarks from Lutnick

Regulators in China moved to restrict companies from buying Nvidia chips after they felt insulted by remarks on CNBC by U.S. commerce secretary Howard Lutnick, the FT reports. “We don’t sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick said in July 15. “You want to sell the Chinese enough that their developers get addicted to the American technology stack, that’s the thinking.”

Bed Bath & Beyond blasts California

Bed Bath & Beyond won’t open stores in California because the state “has created one of the most overregulated, expensive and risky environments for businesses in America,” executive chairman Marcus Lemonis said in a statement. The chain went bankrupt in 2023 and closed all its stores but is attempting a comeback under Kirkland’s Inc. It has opened one new store in Nashville. California officials were unfazed by Lemonis’s criticism. “Like most Americans, we thought Bed Bath & Beyond no longer existed,” the governor’s spokesperson said.

The tide shifts in the labor market

Managers offered up significant raises to keep employees around during the Great Resignation in the aftermath of the pandemic. Now they’re taking the power back with return-to-office policies and pay cuts.

‘Bubble’ worries hit Big Tech stocks

Big Tech stocks fell sharply on Tuesday amid concerns of a potential AI bubble after a new MIT report found that nearly 95% of corporate generative AI pilot programs had “little to no” profit or revenue upside. Experts who spoke to Fortune, however, say this correction is expected and not necessarily indicative of a bubble.

Sony raises console prices due to tariffs

Sony announced that it will raise the price of its PlayStation 5 consoles to adjust for the Trump Administration’s tariffs on electronics made in China. The company joins Microsoft and Nintendo, which have made similar price increases on their consoles this year.

We’re not going to see those Epstein docs

A federal court has ruled for a second time that transcripts and exhibits from the grand jury probe of Jeffrey Epstein will not be released because there are not “any special circumstances” to justify the move.

The markets

S&P 500 futures were flat this morning, premarket, after the index closed down 0.24% yesterday. STOXX Europe 600 was down 0.1% in early trading. The U.K.’s FTSE 100 was flat in early trading. Japan’s Nikkei 225 was down 0.65%. China’s CSI 300 was up 0.39%. The South Korea KOSPI was up 0.37%. India’s Nifty 50 was up 0.29% before the end of the session. Bitcoin fell to $113.8K.

Around the watercooler

Tesla shareholder group urges probe, ‘appropriate remedial action’ from Nasdaq over Elon Musk’s $29 billion pay package by Nick Lichtenberg

Billionaire Epic CEO Judy Faulkner built her $5.7 billion-a-year software firm in a basement. She says not getting an MBA was a ‘really good thing’ by Preston Fore

Trump may want lower interest rates for consumers, but it sure is convenient for the national debt he’s creating, too by Eleanor Pringle

Cape Cod is considering taxing luxury home sales of $2+ million to raise funds for the housing market’s ‘missing middle’ by Sydney Lake

CEO Daily is compiled and edited by Joey Abrams and Jim Edwards.



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Google DeepMind agrees to sweeping partnership with the U.K. government

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AI lab GoogleDeepMind announced a major new partnership with the U.K. government Wednesday, pledging to accelerate breakthroughs in materials science and clean energy, including nuclear fusion, as well as conducting joint research on the societal impacts of AI and on ways to make AI decision-making more interpretable and safer.

As part of the partnership, Google DeepMind said it would open its first automated research laboratory in the U.K. in 2026. That lab will focus on discovering advanced materials including superconductors that can carry electricity with zero resistance. The facility will be fully integrated with Google’s Gemini AI models. Gemini will serve as a kind of scientific brain for the lab, which will also use robotics to synthesize and characterize hundreds of materials per day, significantly accelerating the timeline for transformative discoveries.

The company will also work with the U.K. government and other U.K.-based scientists on trying to make breakthroughs in nuclear fusion, potentially paving the way for cheaper, cleaner energy. Fusion reactions should produce abundant power while producing little to no nuclear waste, but such reactions have proved to be very difficult to sustain or scale up.

Additionally, Google DeepMind is expanding its research alliance with the government-run U.K. AI Security Institute to explore methods for discovering how large language models and other complex neural network-based AI models arrive at decisions. The partnership will also involve joint research into the societal impacts of AI, such as the effect AI deployment is likely to have on the labor market and the impact increased use of AI chatbots may have on mental health.

British Prime Minister Keir Starmer said in a statement that the partnership would “make sure we harness developments in AI for public good so that everyone feels the benefits.”

“That means using AI to tackle everyday challenges like cutting energy bills thanks to cheaper, greener energy and making our public services more efficient so that taxpayers’ money is spent on what matters most to people,” Starmer said.

Google DeepMind cofounder and CEO Demis Hassabis said in a statement that AI has “incredible potential to drive a new era of scientific discovery and improve everyday life.”

As part of the partnership, British scientists will receive priority access to Google DeepMind’s advanced AI tools, including AlphaGenome for DNA sequencing; AlphaEvolve for designing algorithms; DeepMind’s WeatherNext weather forecasting models; and its new AI co-scientist, a multi-agent system that acts as a virtual research collaborator.

DeepMind was founded in London in 2010 and is still headquartered there; it was acquired by Google in 2014.

Gemini’s U.K. footprint expands

The collaboration also includes potential development of AI systems for education and government services. Google DeepMind will explore creating a version of Gemini tailored to England’s national curriculum to help teachers reduce administrative workloads. A pilot program in Northern Ireland showed that Gemini helped save teachers an average of 10 hours per week, according to the U.K. government.

For public services, the U.K. government’s AI Incubator team is trialing Extract, a Gemini-powered tool that converts old planning documents into digital data in 40 seconds, compared to the current two-hour process.

The expanded research partnership with the U.K. AI Security Institute will focus on three areas, the government and DeepMind said: developing techniques to monitor AI systems’ so-called “chain of thought”—the reasoning steps an AI model takes to arrive at an answer; studying the social and emotional impacts of AI systems; and exploring how AI will affect employment.

U.K. AISI currently tests the safety of frontier AI models, including those from Google DeepMind and a number of other AI labs, under voluntary agreements. But the new research collaboration could potentially raise concerns about whether the U.K. AISI will remain objective in its testing of its now-partner’s models.

In response to a question on this from Fortune, William Isaac, principal scientist and director of responsibility at Google DeepMind, did not directly address the issue of how the partnership might affect the U.K. AISI’s objectivity. But he said the new research agreement puts in place “a separate kind of relationship from other points of interaction.” He also said the new partnership was focused on “question on the horizon” rather than present models, and that the researchers would publish the results of their work for anyone to review.

Isaac said there is no financial or commercial exchange as part of the research partnership, with both sides contributing people and research resources.

“We’re excited to announce that we’re going to be deepening our partnership with the U.K. AISI to really focus on exploring, really the frontier research questions that we believe are going to be important for ensuring that we have safe and responsible development,” he said.

He said the partnership will produce publicly accessible research focused on foundational questions—such as how AI impacts jobs or how talking to chatbots effects mental health—rather than policy-specific recommendations, though the findings could influence how businesses and policymakers think about AI and how to regulate it.

“We want the research to be meaningful and provide insights,” Isaac said.

Isaac described the U.K. AISI as “the crown jewel of all of the safety institutes” globally and said deepening the partnership “sends a really strong signal” about the importance of engaging responsibly as AI systems become more widely adopted.

The partnership also includes expanded collaboration on AI-enhanced approaches to cybersecurity. This will include the U.K. government exploring the sue of tools like Big Sleep, an AI agent developed by Google that autonomously hunts for previously unknown “Zero Day” cybersecurity exploits, and CodeMender, another AI agent that can search for and then automatically patch security vulnerabilities in open source software.

British Technology Secretary Liz Kendall is visiting San Francisco this week to further the U.K.-U.S. Tech Prosperity Deal, which was agreed to during U.S. President Trump’s state visit to the U.K. in September. In November alone, the British government said the pact helped secure more than $32.4 billion of private investment committed to the U.K tech sector.

The Google-U.K. partnership builds on a £5 billion ($6.7 billion) investment commitment from Google made earlier this year to support U.K. AI infrastructure and research, and to help modernize government IT systems.

The British government also said collaboration supports its AI Opportunities Action Plan and its £137 million AI for Science Strategy, which aims to position the UK as a global leader in AI-driven research.



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49-year-old Democrat who owns a gourmet olive oil store swipes another historically Republican district from Trump and Republicans

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Democrat Eric Gisler claimed an upset victory Tuesday in a special election in a historically Republican Georgia state House district.

Gisler said he was the winner of the contest, in which he was leading Republican Mack “Dutch” Guest by about 200 votes out of more than 11,000 in final unofficial returns.

Robert Sinners, a spokesperson with the secretary of state’s office, said there could be a few provisional ballots left before the tally is finalized.

“I think we had the right message for the time,” Gisler told The Associated Press in a phone interview. He credited his win to Democratic enthusiasm but also said some Republicans were looking for a change.

“A lot of what I would call traditional conservatives held their nose and voted Republican last year on the promise of low prices and whatever else they were selling,” Gisler said. “But they hadn’t received that.”

Guest did not immediately respond to a text message seeking comment late Tuesday.

Democrats have seen a number of electoral successes in 2025 as the party’s voters have been eager to express dissatisfaction with Republican President Donald Trump.

In Georgia in November, they romped to two blowouts in statewide special elections for the Public Service Commission, unseating two incumbent Republicans in campaigns driven by discontent over rising electricity costs.

Nationwide, Democrats won governor’s races by broad margins in Virginia and New Jersey. On Tuesday a Democrat defeated a Trump-endorsed Republican in the officially nonpartisan race for Miami mayor, becoming the first from his party to win the post in nearly 30 years.

Democrats have also performed strongly in some races they lost, such as a Tennessee U.S. House race last week and a Georgia state Senate race in September.

Republicans remain firmly in control of the Georgia House, but their majority is likely fall to 99-81 when lawmakers return in January. Also Tuesday, voters in a second, heavily Republican district in Atlanta’s northwest suburbs sent Republican Bill Fincher and Democrat Scott Sanders to a Jan. 6 runoff to fill a vacancy created when Rep. Mandi Ballinger died.

The GOP majority is down from 119 Republicans in 2015. It would be the first time the GOP holds fewer than 100 seats in the lower chamber since 2005, when they won control for the first time since Reconstruction.

The race between Gisler and Guest in House District 121 in the Athens area northeast of Atlanta was held to replace Republican Marcus Wiedower, who was in the seat since 2018 but resigned in the middle of this term to focus on business interests.

Most of the district is in Oconee County, a Republican suburb of Athens, reaching into heavily Democratic Athens-Clarke County. Republicans gerrymandered Athens-Clarke to include one strongly Democratic district, parceling out the rest of the county into three seats intended to be Republican.

Gisler ran against Wiedower in 2024, losing 61% to 39%. This year was Guest’s first time running for office.

A Democrat briefly won control of the district in a 2017 special election but lost to Wiedower in 2018.

Gisler, a 49-year-old Watkinsville resident, works for an insurance technology company and owns a gourmet olive oil store. He campaigned on improving health care, increasing affordability and reinvesting Georgia’s surplus funds

Guest is the president of a trucking company and touted his community ties, promising to improve public safety and cut taxes. He was endorsed by Republican Gov. Brian Kemp, an Athens native, and raised far more in campaign contributions than Gisler.



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Rivian CEO says it’s a misconception EVs are politicized, with a 50-50 party split among R1 buyers

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If Rivian’s sales are any indication, owning an electric vehicle isn’t such a partisan issue, despite President Donald Trump’s rollbacks of mandates, incentives, and targets for EVs.

At the Fortune Brainstorm AI conference in San Francisco on Tuesday, Rivian CEO RJ Scaringe said it’s a misconception that electrification is politicized, explaining that most customers buy a product based on how it fits their needs, not their ideology. The questions car buyers ask, he said, are the same whether they’re purchasing one with an internal-combustion engine or a battery: “Is it exciting? Are you attracted to the product? Does it draw you in? Does the brand positioning resonate with you? Do the features answer needs that you have?”

Buyers of Rivian’s R1 electric SUV are split roughly 50-50 between Republicans and Democrats, Scaringe told Fortune’s Andrew Nusca. “I think that’s extraordinarily powerful news for us to recognize—that this isn’t just left-leaning buyers,” he added. “These are people that are saying, ‘I like the idea of this product, I’m excited about it.’ And this is thousands and thousands of customers. This is statistically relevant information.”

Buying an EV was once an indication of left-leaning politics, but the politics got scrambled after Tesla CEO Elon Musk became the top Republican donor and a close adviser to Trump. That drew some new customers to Tesla, and turned off a lot of progressive EV buyers, with many existing owners putting bumper stickers on their Teslas explaining that they bought their cars before Musk’s hard-right turn. Trump and Musk later had a stunning public feud, in part over the administration’s elimination of EV and solar tax credits.

But Scaringe said he started Rivian with a long-term view, independent of any policy framework or political trends. He also insisted that if Americans have more EV choices, sales would follow. Right now, Tesla dominates a key corner of the market, namely EVs in the $50,000 price range. Rivian’s forthcoming R2 mid-size SUV will represent a new choice in that market, with a starting price of $45,000 versus the R1’s $70,000.

Ten years from now, Scaringe said he hopes—and believes—that EV adoption in the U.S. will be meaningfully higher than it is today across the board, explaining that the main constraint isn’t on the demand side. Instead, it’s on the supply side, which suffers from “a shocking lack of choice,” especially compared to Europe and China, he added. EV options in the U.S. are limited by the fact that Chinese brands are shut out of the market.

More choices for U.S. EV buyers would presumably create more competition for Rivian—and indeed, the flood of low-priced Chinese EVs in other auto markets has created a backlash, with countries such as Canada imposing steep tariffs on them. But Scaringe appears to view more competition as positive for the market overall.

“I do think that the existence of choice will help drive more penetration, and it actually creates a unique opportunity in the United States,” he said.



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