Last Update 27 Nov 25

Fair value Increased 4.05%

WMT: AI Shopping Agent And CEO Transition Will Drive Stable Performance Ahead

Walmart's analyst price target was raised significantly, from $117 to $130. Analysts pointed to robust quarterly results, continued share gains across product categories, and overall business momentum as the primary drivers behind the upward revision.

Analyst Commentary

Walmart's latest quarterly performance and revised outlook have sparked a considerable number of reactions across Wall Street, leading to an array of both optimistic and cautious perspectives from analysts.

Bullish Takeaways

Bullish analysts point to Walmart's consistent outperformance versus other large retailers, highlighting share gains in grocery and general merchandise as evidence of the retailer's strong execution and relevance across income segments.
Several upward price target revisions reflect heightened confidence that Walmart's ability to capture higher-income households while defending value for budget-conscious consumers will support ongoing sales and margin growth.
Analysts see momentum in alternative revenue streams, such as e-commerce and advertising, which are growing at an impressive pace and are expected to drive incremental margin expansion through 2026 and beyond.
The elevation of John Furner as CEO is regarded as a smooth transition that ensures continuity, supporting expectations for strategic consistency and ongoing business momentum.

Bearish Takeaways

Some cautious analysts note moderation in spending among lower-income consumers, which could pressure growth if economic headwinds persist or intensify.
Persistent inflationary trends, especially in general merchandise, pose risks around pricing power and demand elasticity, which could affect value perceptions among Walmart's core customer base.
While Walmart’s market share gains and solid comps remain a highlight, the competitive grocery landscape and potential disinflation in the sector may present margin and growth risks moving forward.
Certain outlooks raised concerns about pressures from broader retail industry dynamics, including government program changes like SNAP benefits, which could impact traffic and sales in key departments.

What's in the News

Walmart is testing ads within its new AI shopping agent, Sparky, aiming to create a new revenue stream from chat-based shopping experiences (The Wall Street Journal).
The company is in talks to acquire Israeli startup R&A Data to better combat scams and counterfeits on its online marketplace (CNBC).
Plans are underway to switch Walmart's primary stock listing from the New York Stock Exchange to the Nasdaq Global Select. This change is expected to take effect in December 2025.
Walmart began a new strategy for raising hourly employee wages based on factors such as attendance, teamwork, and store performance (Business Insider).
Walmart has paused job offers to candidates requiring H-1B visas due to recent changes in visa fee policies (Bloomberg).

Valuation Changes

The Fair Value Estimate has risen modestly, increasing from $113.78 to $118.38 per share.
The Discount Rate has fallen slightly, moving from 7.02% to 7.01%, reflecting a minor decrease in perceived risk.
Revenue Growth projections have increased, now at 4.89% compared to the previous 4.63%.
The Net Profit Margin has edged up, climbing from 3.41% to 3.44%.
The Future P/E Ratio is projected to be slightly higher, up from 40.09x to 40.54x.

Strategic focus on omni-channel experiences, AI adoption, and rapid delivery deeply integrates digital and physical retail, enhancing customer retention and operational efficiency.
Diversification into higher-margin streams and international expansion strengthens earnings resilience and transforms Walmart's profit mix beyond traditional retail.
Rising costs, competitive pressures, and international challenges threaten Walmart's margin expansion and profitability, while digital growth remains offset by operational inefficiencies and capital demands.

Catalysts

About Walmart

Engages in the operation of retail and wholesale stores and clubs, eCommerce websites, and mobile applications worldwide.What are the underlying business or industry changes driving this perspective?

Rapid growth in global e-commerce (25% YoY, with 26% in the US and >20% internationally) and investment in fast, seamless omni-channel experiences (e.g., delivery from stores within 3 hours to 95% of US households by year-end) position Walmart to benefit from ongoing consumer preference for integrated digital and physical shopping, underpinning sustained revenue growth and increased customer retention.
Aggressive adoption of AI for both customer engagement (Sparky assistant, personalization) and supply chain/logistics (digital twins, predictive delivery windows, inventory management) is likely to drive future cost reductions and productivity gains, supporting higher operating margins and profitability.
Expansion of high-margin business streams-Walmart Connect (advertising, up 31-46% globally), marketplace, and Walmart+ memberships (global advertising up 46%, membership income up 15%)-is diversifying Walmart's income base beyond retail, gradually transforming the company's profit mix and resulting in structurally higher net margins and earnings over time.
Strengthening international footprint, notably in fast-growing markets such as China (sales up 30%), Mexico and India, leverages urbanization and middle-class expansion, with localization strategies and tech platform rollouts expected to fuel both top line and bottom line growth.
Walmart's extensive logistics infrastructure, strong inventory/price management, and ability to offer rapid last-mile delivery further entrench its market share as retail consolidates, setting up for durable revenue growth and the potential to consistently grow operating income faster than sales.

Walmart Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Walmart's revenue will grow by 4.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.1% today to 3.5% in 3 years time.
Analysts expect earnings to reach $27.4 billion (and earnings per share of $3.47) by about September 2028, up from $21.3 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $24.0 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 38.9x on those 2028 earnings, up from 38.2x today. This future PE is greater than the current PE for the US Consumer Retailing industry at 21.7x.
Analysts expect the number of shares outstanding to decline by 0.81% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.87%, as per the Simply Wall St company report.

Walmart Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

While Walmart's e-commerce and digital businesses are growing rapidly, management acknowledged that international e-commerce operations remain loss-making and delivery/logistics costs on grocery continue to pressure net margins; persistent inefficiencies or inability to improve these economics could pose a significant long-term constraint on overall profitability and operating income.
Management highlighted ongoing tariff impacts, with costs rising each week and expected to continue into upcoming quarters-if trade policy uncertainty or supply chain disruptions persist, adjusting consumer prices to offset cost increases could risk revenue growth or force margin compression as Walmart attempts to absorb higher expenses.
Competitive intensity in grocery and digital retail is increasing, with references to major competitors expanding online grocery delivery; this forces Walmart to continually invest in speed, convenience, and customer experience potentially leading to higher capital expenditures and opex, which could erode net margins and slow free cash flow growth if not offset by revenue gains.
Long-term wage inflation and rising costs related to general liability and workers' compensation claims-specifically, $730 million of incremental expense this year and expectations for continued claims cost inflation-raise the risk of sustained SG&A pressure, potentially constraining operating margin expansion and earnings growth.
Walmart's global expansion strategy, particularly in lower-margin, highly competitive and regulatory-complex emerging markets, introduces risk of capital allocation missteps; international segments still operate below group margin levels, so prolonged unprofitability or regulatory/tariff headwinds abroad could drag on consolidated earnings and dilute return on invested capital.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $112.0 for Walmart based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $127.0, and the most bearish reporting a price target of just $64.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $789.9 billion, earnings will come to $27.4 billion, and it would be trading on a PE ratio of 38.9x, assuming you use a discount rate of 6.9%.
Given the current share price of $102.29, the analyst price target of $112.0 is 8.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Omni-Channel Expansion and AI Advances Will Drive Continued Market Leadership