✦ The Future BetsNarrow moat
Walmart (WMT) — the future bets
Almost none of Walmart's bets are about selling more goods, because a company earning four cents cannot improve much that way.
Walmart's bets are unusual in that almost none of them are about selling more goods. The retail business is mature, the American map is essentially drawn, and the company's own strategy document lists five priorities of which only one — opening and remodelling stores — describes conventional retailing1.
What the other four describe is a different company. Walmart is spending to become a media network, a marketplace, a logistics provider and a financial services business, each of them attached to a retail operation that supplies the traffic and the data. The reason is arithmetic rather than ambition: a company earning 4.2 cents on the dollar2 cannot improve much by selling more merchandise, and can improve a great deal by selling a few things that cost nothing to produce.
Four bets are worth watching. The first is what $2.3 billion of television manufacturer was for — VIZIO, bought in December 2024 explicitly to accelerate the advertising business3, and currently diluting its growth rate rather than adding to it. The second is agentic commerce: Walmart has put its own shopping assistant inside ChatGPT4, which is either a clever distribution move or an admission that the customer may soon start somewhere other than Walmart. The third is international, which is 19% of net sales5 and growing far faster than the United States. The fourth is the $30 billion of share repurchase authority the board approved in February 20266, which is a statement about what Walmart thinks its own shares are worth.
None of these is a moonshot. Walmart does not do moonshots; it does incremental compounding on an enormous base, which is why its capital expenditure goes to distribution centres rather than to laboratories.
The honest risk in the whole programme is that it is a response to a problem rather than an expansion of a strength. General merchandise has not grown in three years7. Every one of these bets is, in part, an answer to that.
What tests this branch is membership and other income and advertising growth, both set against net sales growth. In the June 2026 quarter the two were 15.6% and 38% against 5.9%8. The bets are working while those numbers stay multiples of the last one.
Advertising, membership and marketplace are all compounding at several times the rate of net sales, which is the test of this branch and it is being passed comfortably. The reservation is that the programme is partly a response to general merchandise having stopped growing rather than an expansion from strength.
The single cleanest test of whether the non-merchandise bets are working, alongside advertising at +38%. While both stay multiples of net sales growth the mix shift the share price assumes is actually happening.
Source: Walmart second-quarter fiscal 2027 results (August 20, 2026) ↗- ReportedThe retail business is mature, the American map is essentially drawn, and the company's own strategy document lists five priorities of which only one — opening and remodelling stores — describes conventional retailing.Walmart Form 10-K, fiscal year ended January 31, 2026 - Item 1 Business and Item 2 Properties (approximately 280 million customers a week across more than 10,900 stores in 19 countries; 2.1 million associates, 1.6 million in the U.S.; 4,611 Walmart U.S. retail units of which 3,728 owned, 601 Sam's Clubs of which 464 owned, 5,743 international stores of which 1,486 owned; 3,566 supercenters at 633,724 thousand square feet, 351 discount stores at 36,609, 694 neighborhood markets and small formats at 36,609/28,375 with a 42,000 average; 192 U.S. and 179 international distribution facilities, 149 owned; pickup and delivery at over 8,400 locations globally; EDLP and EDLC; private brands; competition; Flipkart and PhonePe majority stakes in 2018) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
- Moat Explorer calcThe reason is arithmetic rather than ambition: a company earning 4.2 cents on the dollar cannot improve much by selling more merchandise, and can improve a great deal by selling a few things that cost nothing to produce.Moat Explorer calculation from figures in Walmart's own filings: global eCommerce of about $150.4 billion (Walmart U.S. $99.6B + International $35.8B + Sam's Club $15.0B) against $120.9 billion, a $29.5 billion increase against a $31,875M rise in net sales ($706,413M against $674,538M), about 92%; Walmart U.S. selling floor of 698.7 million square feet (633,724 + 36,609 + 28,375 thousand) and net sales per store of $104.7 million ($482,975M over 4,611 stores); operating margin 4.18% ($29,825M/$713,163M) against 4.31% ($27,012M/$648,125M); net margin 3.07%; gross profit rate 24.2% ($171,018M/$706,413M); grocery 59.1% of Walmart U.S. net sales ($285,482M/$482,975M) against 59.8% ($264,210M/$441,817M) and grocery growth of 3.4%; general merchandise to grocery ratio 0.40 against 0.43; health and wellness +26.7% ($54,898M to $69,547M); payables less inventories $4,210M ($63,061M less $58,851M); rent 0.34% of revenue ($2,434M/$713,163M); capital expenditure 64% of operating cash flow ($26,642M/$41,565M); a 1% overrun on $147,943M of expense is $1,479M; eCommerce penetration 27.5% international ($35.8B/$130,423M) and 20.6% at Walmart U.S. ($99.6B/$482,975M); shareholder returns $15,587M ($7,507M dividends plus $8,080M repurchases) against $14,923M of free cash flow; Q2 FY2027 net income attributable down 9.4% ($6,366M against $7,026M); Walmart U.S. comparable sales of about 3.9% excluding the 125 basis point pharmacy headwind — FY2024-Q2 FY2027 · publ. September 2026 · source ↗
- ReportedThe first is what $2.3 billion of television manufacturer was for — VIZIO, bought in December 2024 explicitly to accelerate the advertising business, and currently diluting its growth rate rather than adding to it.TechCrunch - Walmart completes its $2.3 billion acquisition of VIZIO on December 3, 2024 at $11.50 a share, for the SmartCast operating system and its more than 19 million active accounts, to bring to market new and differentiated ways for advertisers to connect with customers at scale through Walmart Connect — December 2024 · publ. December 3, 2024 · source ↗
- ReportedThe second is agentic commerce: Walmart has put its own shopping assistant inside ChatGPT, which is either a clever distribution move or an admission that the customer may soon start somewhere other than Walmart.Retail Dive - Walmart brings its Sparky commerce agent to ChatGPT as an in-platform app experience, following the October 2025 OpenAI partnership allowing customers to discover and buy Walmart items inside ChatGPT — 2026 · publ. 2026 · source ↗
- ReportedThe third is international, which is 19% of net sales and growing far faster than the United States.Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
- ReportedThe fourth is the $30 billion of share repurchase authority the board approved in February 2026, which is a statement about what Walmart thinks its own shares are worth.Walmart Form 10-K, fiscal year ended January 31, 2026 - Item 1A Risk Factors and Item 5 (the eCommerce concentration and AI-enabled platform risk factor; five-year cumulative total return with $100 invested on February 1, 2021 worth $272.28 in Walmart against $201.03 in the S&P 500 and $164.12 in the S&P 500 Consumer Discretionary Distribution and Retailing Index; the $20.0 billion November 2022 repurchase programme with $4.0 billion remaining and the new $30.0 billion authorisation approved February 2026) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
- ReportedGeneral merchandise has not grown in three years.Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
- ReportedIn the June 2026 quarter the two were 15.6% and 38% against 5.9%.Walmart second-quarter fiscal 2027 earnings presentation (Form 8-K exhibit 99.2) - Walmart U.S. comp sales +2.6% with transactions excluding fuel +1.5% and average ticket excluding fuel +1.1% against total like-for-like inflation of 1.4%, and an approximately 125 basis point pharmacy headwind from maximum fair price regulation; eCommerce +24% including approximately 43% growth in store-fulfilled delivery, total advertising +38% including Walmart Connect +43%, and Marketplace sales +52%; expedited deliveries under three hours approximately 37% of store-fulfilled orders; share gains across categories and income tiers led by upper-income households — Q2 FY2027 · publ. August 20, 2026 · source ↗