What Happened?

Shares of retail behemoth Walmart (NYSE: WMT) jumped 3.7% in the afternoon session after the company announced a partnership with OpenAI to create 'AI-first shopping experiences.'

This collaboration brought together the world's largest retailer and the influential artificial intelligence company behind ChatGPT. The partnership allowed customers to shop for Walmart's products directly through the ChatGPT interface using an instant checkout feature. The goal was to shift the shopping experience from reactive to proactive, with AI helping to learn, plan, and predict customer needs. The news was well-received by investors, and the stock's rise contributed positively to the Dow Jones Industrial Average.

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What Is The Market Telling Us

Walmart’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 8.1% on the news that the company reported disappointing fourth quarter 2024 (fiscal 2025) financial results. 

Revenue was in line with estimates, with same-store sales roughly meeting expectations. The top line growth outlook wasn't exciting, with management guiding for FY'26 sales growth of 3% to 4%, though it's hard to pile on the company given its massive revenue base. Operating income is expected to grow between 3.5% and 5.5%, but profitability will take a 1.5% hit from the VIZIO acquisition and a tough comparison due to the leap year. These margin pressures contributed to the poor earnings outlook, which fell sharply below Wall Street's estimates. 

In addition, Walmart's results are often seen as a barometer for the broader U.S. retail sector, and the underwhelming performance adds to concerns about the strength of consumer spending. Overall, this quarter could have been better.

Walmart is up 18.6% since the beginning of the year, and at $106.78 per share, has set a new 52-week high. Investors who bought $1,000 worth of Walmart’s shares 5 years ago would now be looking at an investment worth $2,225.

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