Walmart Stock Faces Growth Challenges Despite Innovations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy WMT?
Source: Fool
- Market Performance Analysis: Walmart's stock has surged nearly 170% over the past five years, significantly outperforming the S&P 500, indicating success in e-commerce and AI applications, yet analysts remain cautious about its future growth prospects.
- Financial Overview: In the first nine months of 2025, Walmart reported nearly $573 billion in revenue with a growth rate of 4%, and while net income approached $18 billion, up nearly 25%, most of this gain stemmed from rising equity investment values.
- Operating Income Decline: Despite revenue growth, Walmart's operating income fell by 2%, primarily due to increased selling, general, and administrative expenses, highlighting challenges in cost management.
- Valuation Concerns: With a price-to-earnings ratio of 45, significantly above the S&P 500's 30, investors face a premium for Walmart's stock despite its lackluster growth, diminishing the appeal of adding shares in the current environment.
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Analyst Views on WMT
Wall Street analysts forecast WMT stock price to fall
26 Analyst Rating
25 Buy
1 Hold
0 Sell
Strong Buy
Current: 133.640
Low
119.00
Averages
125.75
High
136.00
Current: 133.640
Low
119.00
Averages
125.75
High
136.00
About WMT
Walmart Inc. is a technology-powered omnichannel retailer. The Company is engaged in the operation of retail and wholesale stores and clubs, as well as eCommerce Websites and mobile applications, located throughout the United States (U.S.), Africa, Canada, Central America, Chile, China, India and Mexico. It operates in three reportable segments: Walmart U.S., Walmart International and Sam's Club U.S. The Walmart U.S. segment includes the Company's mass merchandising concept in the U.S., as well as eCommerce, which includes omni-channel initiatives and certain other business offerings such as advertising services. The Walmart International segment consists of the Company's operations outside of the U.S. through its subsidiaries, as well as eCommerce and omni-channel initiatives. The Sam's Club U.S. segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Same-Day Delivery Expansion: Walmart announced in April 2025 that advanced mapping technology would enable 12 million additional customers to access same-day delivery services, significantly enhancing customer satisfaction and driving sales growth.
- Inventory Management Optimization: A 29-week study across 12 RFID-enabled stores found a 16% reduction in out-of-stock items, indicating Walmart's significant success in ensuring sufficient product availability on shelves, thus enhancing the shopping experience for customers.
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- Convenience Enhancement: Walmart's introduction of the AI assistant Sparky improves order accuracy and customer experience, with plans to expand into service booking and reordering, thereby increasing customer loyalty.
- Same-Day Delivery Expansion: The company employs advanced mapping technology to enable 12 million additional customers to access same-day delivery services, significantly enhancing shopping convenience and customer satisfaction.
- Inventory Management Optimization: A 29-week study across 12 RFID-enabled stores found a 16% reduction in out-of-stock items, which not only improves product availability on shelves but also boosts customer repurchase intentions.
- Shareholder Return Potential: Walmart's stock grew at a compound annual rate of 18.5% from 2016 to 2025, and with 52 consecutive years of dividend increases, it is expected to deliver stronger returns for shareholders over the next decade.
See More
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- Sector Performance: In 2026, the consumer staples sector has surged over 15.5% in the S&P 500, becoming the third-best performing sector, indicating a growing investor preference for defensive stocks amid a market rotation.
- Valuation Surge: Wolfe Research noted that market-weighted valuations for consumer staples have reached their highest levels since the 1990s, reflecting increased investor confidence in the sector despite a lackluster overall market performance.
- Walmart's Market Position: Walmart's stock jumped 20% in 2026, allowing it to join the $1 trillion market cap club, showcasing its adaptability in the AI economy and solidifying its leading position in retail.
- Future Outlook: Analysts predict that as consumer demand rebounds in 2026, the fundamentals for the consumer staples sector are likely to improve, particularly with potential tax relief for lower-income households boosting product demand.
See More
Earnings Season Brings Diverse Company Reports Ahead
- Earnings Expectations: As earnings season approaches, a diverse array of companies, including Walmart (WMT) and Palo Alto Networks (PANW), are set to report, with analysts forecasting over 10% year-over-year growth for Walmart, indicating resilience amid moderating consumer spending.
- Acquisition Impact: Palo Alto Networks (PANW) is expected to report 14%-16% year-over-year growth following its $25 billion acquisition of CyberArk, although it faces execution and integration risks, its strategic shift towards a cloud-based security platform remains promising.
- Energy Sector Challenges: Occidental Petroleum (OXY) is projected to report a 72% year-over-year decline in earnings for Q4, reflecting pressures from weak oil prices and compressed margins, although its investment-grade balance sheet and recent acquisitions may provide support in the next commodity cycle.
- Market Response: Walmart (WMT) shares have risen approximately 20% year-to-date, nearing a $1 trillion market cap, and despite valuation pressures, analysts remain optimistic about its strong market share and pricing power, indicating a shifting competitive landscape in the retail sector.
See More
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- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
Walmart's Convenience Focus Boosts Stock Growth Potential
- Convenience Enhancement: In June 2025, Walmart introduced the AI assistant Sparky, which synthesizes reviews, answers questions, and offers product comparisons, with plans to expand into service booking and reordering, thereby improving customer experience and loyalty.
- Same-Day Delivery Expansion: Walmart announced in April 2025 that advanced mapping technology would enable 12 million additional customers to access same-day delivery services, significantly enhancing customer satisfaction and driving sales growth.
- Inventory Management Optimization: A 29-week study across 12 RFID-enabled stores found a 16% reduction in out-of-stock items, indicating Walmart's significant success in ensuring sufficient product availability on shelves, thus enhancing the shopping experience for customers.
- Shareholder Return Potential: Walmart's stock grew at a compound annual rate of 18.5% from 2016 to 2025, and with 52 consecutive years of dividend increases, it is expected to deliver stronger returns for shareholders over the next decade.
See More
Stocks Remain Steady Amid Easing Inflation Rates
- Inflation Report Impact: A cooler-than-expected inflation report resulted in flat stock performance for the day.
- Treasury Yields Reaction: The report led to lower Treasury yields as investors anticipated potential rate cuts in the coming months.
See More
