BENTONVILLE, Arkansas, August 18, 2026, 10:30 CDT
- Walmart gained 1.4% ahead of its fiscal second-quarter results due Thursday.
- Walmart Connect expanded by 44% in the previous quarter and accounts for roughly a third of operating income.
- Analysts project the advertising business will achieve gross margins of around 70%.
Shares of Walmart Inc. NASDAQ:WMT gained 1.4% on Tuesday, with investors anticipating results from the retailer’s expanding advertising unit. The stock was at $115.88 as of 10:45 a.m. EDT.
Retail expansion is slowing down. Walmart Connect has taken on a larger share of profit generation, with its estimated gross margin around 70%. Advertising accounts for about a third of Walmart’s operating income, even though it makes up only a minor portion of sales.
The shift in sales mix impacts Walmart’s valuation. The stock is priced at 40.9 times trailing earnings. Sustained growth in its high-margin advertising business is needed to support that premium.
| Operating signal | Latest result | Investor read-through |
|---|---|---|
| Walmart Connect growth | 44% | Marks fastest pace since 2023 reporting started |
| Global e-commerce growth | 26% | Drives gains in digital stock and customer insights |
| Global membership-fee growth | 17.4% | Strengthens customer loyalty, boosts ad precision |
| U.S. same-store sales growth | 4.1% | Declines from about 4.5% seen in the last five quarters |
Walmart Connect reported a 44% increase for the quarter ending April 30, marking its quickest growth rate since Walmart started reporting this metric in early 2023.
Same-store sales showed a different trend. U.S. growth eased to 4.1%, down from roughly 4.5%. Analysts forecast that the upcoming result will fall under 4% for the first time since early 2024.
Sarah Henry, managing partner at Logan Capital Management, said “The sky’s the limit” for Walmart Connect. Reuters
| Fiscal Q2 metric | Company outlook or consensus | Previous year’s figure |
|---|---|---|
| Net sales growth at constant exchange rates | 4% to 5% | $175.8 billion |
| Adjusted operating income growth, constant currency | 7% to 10% | $7.9 billion |
| Adjusted earnings per share | $0.72 to $0.74 | $0.68 |
| Revenue consensus | $186.82 billion | $177.40 billion reported |
The company forecast that adjusted operating income will increase at a pace exceeding sales growth. The difference between the two remains the main challenge. If Connect underperforms, that gap could narrow swiftly.
Customer information boosts momentum. Walmart+ membership enhances targeting capabilities throughout the retailer’s stores, website, and app. Vizio brings that inventory to streaming TV.
| Digital-ad comparison | Latest measure | Strategic implication |
|---|---|---|
| Walmart Connect growth | 44% | Boost to higher-margin earnings |
| Walmart Connect impressions | +17% | Expansion in retail media share |
| Amazon ad impressions | +9% | Bigger platform, impressions rising more slowly |
| Sparky active users | More than doubled | Opportunity for additional AI-driven ad supply |
Walmart is trialling advertisements within Sparky, its AI-driven shopping assistant. Amazon.com Inc. NASDAQ:AMZN has moved further forward with its own shopping chatbot, but Walmart’s in-store data offers a unique advantage for measuring effectiveness.
Analysts maintain a bullish outlook. According to Google Finance, there are 26 Buy ratings and three Hold recommendations. The consensus price target stands at $140.33, suggesting a potential upside of 21.1% from Tuesday’s closing price.
| Analyst | Recommendation | Price target | Date |
|---|---|---|---|
| Jefferies | Buy | $150 | Aug. 14 |
| Bank of America Securities | Buy | $144 | Aug. 12 |
| Morgan Stanley | Buy | $140 | Aug. 16 |
| Guggenheim | Buy | $135 | Aug. 16 |
| Oppenheimer | Hold | $111.20 | Aug. 4 |
The advertising outcome will indicate if Walmart can continue supporting reduced prices and quicker delivery while maintaining its margins. It has become a core earnings factor rather than a secondary operation.
Risks: Reduced consumer spending, higher fuel prices and discounting may counteract advertising growth. Any slowdown at Connect could be a headwind for a stock trading at a high earnings multiple.
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