Walmart (WMT) Managers Look Beyond Traditional Retail to Extend Stock Runway

Walmart (WMT) shares are up more than 31% over the past 12 months, comfortably ahead of the S&P 500’s (SPX) roughly 19% gain. The stock has also significantly outperformed peers, with Costco (COST) barely positive over the same period and Target (TGT) down 21%. 

Even after this strong run—and despite what is clearly a premium valuation—I believe Walmart still has room to run over the long term. The key driver is the company’s accelerating transformation into a technology-enabled, data-driven enterprise that extends well beyond traditional retail.

Walmart is no longer simply a scale retailer competing on price. It is evolving into a hybrid consumer platform, logistics powerhouse, and AI-driven commerce ecosystem, and that shift underpins a bullish long-term outlook.

A Durable Long-Term Growth Algorithm

I believe management remains well positioned to deliver on Walmart’s long-term financial algorithm of roughly 4% annual sales growth and 4%–8% operating income growth. That may sound modest on the surface, but when combined with Walmart’s scale, improving mix, and growing contribution from higher-margin businesses, it creates meaningful earnings and free cash flow leverage over time.

After several years of multiple expansion, the stock’s bull run is likely closer to the middle or later innings rather than the early stage. In the very near term, the setup is somewhat tricky, as management could adopt a conservative tone when it introduces full-year guidance alongside Q4 earnings in mid-February.

However, from a multi-year perspective, Walmart’s fundamentals remain exceptionally strong, supported by continued market share gains, improving profitability in e-commerce, and rapid growth in alternative revenue streams.

Technology, Automation, and AI as Structural Tailwinds

Walmart’s ongoing digital transformation is one of the most underappreciated aspects of the story. The company is leveraging automation, data, and artificial intelligence across its stores, warehouses, and digital platforms to drive productivity and improve the customer experience. AI-enabled tools are improving inventory accuracy, accelerating delivery times, and boosting associate efficiency in both stores and fulfillment centers.

Walmart is also rapidly evolving into an AI-driven shopping destination. Its generative and agentic AI initiatives increasingly support multimodal shopping experiences that blend text, voice, images, and live assistance. The company’s Sparky AI assistant already helps customers search, summarize reviews, build baskets, and personalize recommendations, while also emerging as a new advertising surface.

Strategic partnerships further reinforce this trajectory. Walmart now enables customers to shop and checkout directly through conversational interfaces such as ChatGPT, and it has recently partnered with Google (GOOGL) to integrate Gemini into Walmart and Sam’s Club shopping experiences. These integrations enable customers to discover products via natural-language prompts, receive personalized recommendations linked to their Walmart accounts, and complete purchases without opening the Walmart app. This kind of conversational commerce positions Walmart at the forefront of how AI reshapes consumer behavior.

Alternative Revenue Streams Still in Early-to-Mid Innings

One of the most compelling elements of the Walmart story is the long runway in alternative revenue streams. Retail media through Walmart Connect, marketplace expansion, membership income from Walmart+, fulfillment services, and data monetization through platforms such as Scintilla are increasingly significant contributors to growth and profitability.

While Walmart has already made significant progress in these areas, management commentary suggests that there remains substantial opportunity. These businesses are higher-margin and more capital-light than traditional retail, and their growth enables Walmart to reinvest aggressively in price, convenience, and technology while still expanding operating margins. Over time, this mix shift should structurally improve Walmart’s earnings power and cash flow profile.

Valuation

I estimated Walmart’s fair value by averaging the results of 14 different valuation models, including P/E multiples, a 10-year DCF with a revenue exit, and a multi-stage DDM. Based on this analysis, I arrived at a fair value of approximately $90 per share, implying roughly 25% downside from the current stock price. That said, valuation alone does not fully capture Walmart’s strategic positioning.

There is no question that Walmart trades at a premium valuation. Shares currently command a P/E of roughly 46x and an EV/EBITDA multiple above 23x, above sector medians of 16x and 11x, respectively.

However, I believe that the premium is justified. Walmart’s combination of scale, AI-driven efficiency, alternative revenue growth, and consistent market share gains supports a structurally higher multiple than traditional retailers. This is increasingly a technology-enabled consumer platform with durable cash flow and defensive characteristics, not just a low-margin big-box chain.

Is WMT a Good Stock to Buy Now?

Wall Street analysts remain optimistic about Walmart. Data from TipRanks shows a consensus rating of Strong Buy, supported by 25 Buy ratings, one Hold, and no Sell recommendations. Among the 26 analysts who have issued 12-month price targets for Walmart, the average stock price target is $125.88, implying a ~5% upside in 2026.

See more WMT analyst ratings

Walmart’s Transformation Is Accelerating

In short, Walmart’s reinvention is both real and picking up speed. Its investments in AI, automation, omnichannel infrastructure, and higher-margin revenue streams are strengthening the core business and expanding long-term earnings potential. Even with a richer valuation, I still view Walmart as one of the highest-quality long-term compounders in retail—and I remain bullish on the stock.