Steering a Big Shop

Walmart’s embrace of artificial intelligence in retail has begun to reshape how customers interact with its platform. One of the early examples is Sparky, the company’s agentic AI shopping assistant. Through the Walmart app, shoppers can ask Sparky to build a basket of goods tailored to specific needs, whether that’s organizing a themed party or preparing for a camping trip. While Walmart acknowledges that Sparky is still in its early stages of development, the results are already promising. Customers who use the assistant generally shop more frequently, and their average order values are 35% higher compared to other basket sizes. To accelerate these capabilities, Walmart has partnered with Alphabet and OpenAI to further develop agentic commerce. 

The company’s financial performance underscores the strength of this strategy. In the fourth quarter of 2026, Walmart reported revenue of $190.7 billion, a 5.6% increase year-over-year. Gross profit margin rose to 24%, up 13 basis points. Operating income reached $8.7 billion, marking a 10.8% increase.  

Much of the revenue growth came from households earning over $100,000 annually, a demographic where Walmart is gaining market share. At the same time, the company continues to serve households earning $50,000 and below, many of whom Walmart say are under financial pressure and living from paycheck-to-paycheck.  

E-commerce has become a central pillar of Walmart’s strategy, with sales growing 24% in the quarter and accounting for 23% of total sales. Omnichannel offerings and flexible shopping options have expanded Walmart’s reach, particularly among lower-income customers seeking convenience and value. Advertising revenue has also played a pivotal role in ensuring profitability in e-commerce, with Walmart reporting that advertising has helped the online business remain profitable for four consecutive quarters. Advertising and membership fees together contributed one third of operating income, reflecting a deliberate shift toward higher-margin revenue streams that complement the company’s traditional retail base. 

Despite these achievements, valuation remains a point of debate. Walmart’s price-to-earnings ratio hovers around 45, a level that some view as high given the company’s scale and growth prospects. However, the investment community recognizes Walmart’s effective use of AI and technology to drive e-commerce, logistics, and customer engagement. The combination of the solid financial results, AI-driven shopping experiences, and a diversified revenue model suggests that Walmart is positioning itself as a technology-enabled commerce retail giant.