On August 20, Walmart (NYSE:WMT) reported fiscal second-quarter results that read like a company firing on every cylinder at once. Revenue climbed to $187.9 billion, global e-commerce grew 23%, and advertising sales jumped 38%. The retailer no longer looks like a grocery chain with a website bolted on. It looks like a store network, a marketplace, an ad platform, and a membership club that is starting to feed each other. The open question is whether the stock still leaves room to benefit from that shift.
The Flywheel Finally Clicks
Walmart US e-commerce sales rose 24% during the quarter, its tenth straight quarter of growth above 20%, while Sam’s Club US e-commerce climbed 26% and US marketplace sales jumped 52%. Nearly half of that marketplace volume now moves through Walmart’s own fulfillment network, up almost 400 basis points from a year earlier. Advertising revenue rose 38% globally, and membership fee income grew nearly 17%, powered by record second-quarter net additions to Walmart+. Each piece reinforces the others: more shoppers drive fulfillment volume, which draws marketplace sellers, which funds more advertising.
Price investment is doing real work too. Walmart plowed roughly $2.9 billion in tariff refunds back into everyday prices, pushing rollbacks to 11,000 items in the quarter, up from 7,200 at the end of the first quarter. That helped push adjusted operating income up 17.4% in constant currency and lifted adjusted earnings per share to $0.81 from $0.68 a year earlier. Management raised full-year sales guidance to 4% to 5% growth and adjusted earnings guidance to $2.80 to $2.87 a share. The company’s AI shopping assistant, Sparky, is gaining traction too, with usage up 70% from a year ago and users spending 40% more per order. And Walmart has raised its dividend for 53 straight years, a streak that carried its stock 21.6% higher in 2008 while the broader market collapsed.
Paying Up For Perfection
None of that comes cheap. Walmart’s stock trades at a clear premium to the broader market, a multiple that already assumes growth keeps accelerating rather than merely holding up. Revenue grew 5.1% year over year excluding currency effects on August 25’s read of the quarter, respectable but visibly slower than prior years, and the market share gains coming from higher-income shoppers have their limits.
Cost pressure is building underneath. Walmart now expects more than $2 billion in incremental fuel costs this year beyond its original guidance, and CFO John David Rainey warned of “near-term macro crosswinds” pressuring consumers. US consumer confidence fell in August to its lowest level since January, a backdrop that makes further price hikes harder to justify even as fuel and insurance costs climb. US operating expenses already deleveraged 72 basis points on higher self-insurance claims, depreciation, and healthcare costs. Health and wellness sales, hit by drug-pricing regulation and a shift from branded to generic drugs, subtracted 125 basis points from Walmart US comparable sales, and in-store comps stayed negative for a second straight quarter. Add a dividend yield of just 0.9%, and income investors are leaning almost entirely on price appreciation, not the payout, for their returns.
What The Smart Money Sees
Hedge fund ownership of Walmart rose from 99 funds to 111 in the most recent quarter, a sign institutional money is adding rather than trimming. Short interest sits at just 1.42% of the float, showing little organized skepticism about the stock. Walmart trades at 35.84 times forward earnings as of August 28, a multiple that prices in continued double-digit profit growth with almost no margin for a stumble. That combination is the tension running through this report.
Two Stories, One Stock
Walmart’s second quarter shows a retailer whose newer, faster-growing businesses are starting to lift the whole company rather than just add to it. For the flywheel story to keep paying off, e-commerce, advertising, and membership need to keep compounding faster than fuel costs and consumer fatigue can drag them down. For the premium multiple to hold, that growth has to keep showing up quarter after quarter with little room for disappointment.
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