Bill Gates’ Portfolio Just Added Home Depot (HD) Despite Risks. Time to Buy?

Bill Gates’ Portfolio Just Added Home Depot (HD) Despite Risks. Time to Buy?

Fahad Saleem

Sat, August 15, 2026 at 6:40 PM GMT+3 2 min read

• HD -0.83%
• LOW +0.11%

Latest filings show the Bill & Melinda Gates Foundation Trust opened a new position in Home Depot (NYSE:HD), worth about $353 million, during the second quarter. The stock is down about 15% over the past year.

What's plaguing HD?

High mortgage rates and inflation pressures are causing lower new home construction and renovation projects. This directly hits HD. Home Depot expects the difficult environment to continue. The company is guiding for fiscal 2026 comparable-sales growth of just 0% to 2%, compared with 0.3% reported for 2025.

The pressure is not limited to revenue. Home Depot has also been dealing with declining profitability. The company expects 2026 adjusted operating margin to come in at 12.4% to 12.6%, compared with 13.1.% the year prior.

Valuation

Despite stock declines, HD is trading at roughly 23 times forward earnings. Valuation is high due to brand presence and market dominance, about 50% higher than the sector median and more than the stock's five-year average.

Compare HD to Lowe's Companies Inc (NYSE: LOW). LOW is trading at about 17.5 times forward earnings, much lower than HD. LOW also trades at about 12.7 times forward EBITDA, versus Home Depot at around 16.5 times. However, valuation alone does not mean LOW is a better stock, as Lowe's trades at lower multiples partly because of its smaller scale, weaker historical growth and less dominant position in the professional contractor market.

Potential Catalyst

Bulls say sooner or later the housing market would recover. The 21st Century ROAD to Housing Act could also provide a longer-term tailwind. With strong housing activity, HD can return to mid-single-digit comparable sales growth and boost earnings.

Risks

If mortgage rates remain elevated, housing affordability stays poor and consumer confidence remains weak, Home Depot could face another year of sluggish sales. At the same time, gross-margin pressure and higher interest costs could prevent earnings from growing even if revenue improves modestly.

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 the cheapest AI stock.

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