Nike Inc.’s efforts to revive its fortunes are gaining traction, with early indicators suggesting that the athletic giant’s strategic overhaul is beginning to pay off amid softening competition from upstart rivals. Analysts at TD Cowen have upgraded their rating on Nike’s stock to “buy” from “hold,” citing signs of a nascent turnaround under new Chief Executive Elliott Hill. This optimism stems from proprietary field work that reveals improving momentum for Nike and its Jordan brand, even as competitors like Hoka and On Running show signs of decelerating growth.

The upgrade, detailed in a recent note, projects Nike’s sales to rebound to growth in fiscal 2026, excluding foreign-exchange impacts, with potential for earnings surprises driven by margin recovery. Hill, who took the helm in October 2024 after a stint as a company veteran, has spearheaded the “Win Now” initiative, focusing on inventory optimization, performance-driven innovation, and supply chain diversification. This comes after a challenging period marked by a 9% revenue decline and a 24% drop in earnings per share in Nike’s fiscal second quarter of 2025, as reported by Ainvest.

Shifting Competitive Dynamics

One key factor bolstering Nike’s position is the apparent easing of pressure from nimble challengers that have chipped away at its market share in recent years. Brands such as Hoka and On Running, which posted explosive growth rates exceeding 30% previously, are now facing their own hurdles, including inventory gluts and moderating consumer demand. TD Cowen’s analysis highlights weaker share gains and digital traffic at these peers, creating breathing room for Nike to reclaim shelf space in retail environments.

This shift is particularly evident in the running segment, where Nike has refocused on core products like the Pegasus Premium and Vomero 18 shoes. Posts on X, formerly Twitter, from industry observers echo this sentiment, noting how competitors’ rapid expansions have led to overextension, allowing Nike to capitalize on its established brand strength. For instance, recent commentary points to Hoka’s growth slowing as it grapples with broader retail saturation.

Inventory and Margin Recovery Efforts

Nike’s inventory levels, which stood at $8.0 billion—flat year-over-year—reflect deliberate steps to curb overproduction and reduce promotional discounting, a move aimed at restoring premium positioning. The company has also announced workforce reductions, including a less-than-1% cut in corporate staff in 2025, as part of cost-optimization under Hill’s leadership, according to reports from Deccan Herald.

These measures are expected to bolster gross margins, which have been under pressure from tariffs and supply chain disruptions. JPMorgan’s upgrade to “overweight” with a $93 price target underscores confidence in this recovery, emphasizing Nike’s ability to leverage its $112.5 billion market cap and shareholder returns of $5.3 billion in fiscal 2025, as per Ainvest insights.

Marketing Pivot and Brand Reinvestment

Central to the turnaround is a renewed emphasis on marketing, with Nike shifting dollars from performance advertising to brand-building initiatives. This includes high-profile campaigns tied to sports, aiming to reconnect with athletes and consumers after years of direct-to-consumer focus that alienated wholesale partners. The Drum reports detail how these investments are ramping up omnichannel strategies, with early results showing improved attribution and engagement.

However, challenges persist: Nike anticipates a mid-teens sales drop in upcoming quarters due to lingering inventory issues and external headwinds like tariffs. Yet, as Marketing Week notes, returning to roots in sport and overinvesting in brand could undo past damage, though it won’t be quick.

Investor Sentiment and Stock Performance

Investor response has been cautiously positive, with Nike’s shares rising following the TD Cowen upgrade, trading around $78 as of late August 2025. Pershing Square’s thesis, shared in recent updates, aligns with this view, betting on Hill’s focus on innovation to drive profitable growth over the next few years.

Looking ahead, the upcoming Q1 FY2026 earnings in October 2025 will be pivotal, with analysts watching revenue trends, margin stability, and progress on cost reductions. If executed well, Nike’s strategy could not only stabilize the business but position it for sustained dominance in a crowded athletic apparel market, rewarding patient shareholders amid a broader industry recalibration.