Retail behemoth Walmart (NYSE: WMT) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 5.8% year on year to $179.5 billion. Its non-GAAP profit of $0.62 per share was 3.2% above analysts’ consensus estimates.

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StockStory’s Take

Walmart delivered a positive Q3, with the market responding strongly to growth in both sales and adjusted profit above Wall Street’s expectations. Management attributed the results to ongoing gains in e-commerce, where order volumes surged, and robust international expansion, especially in China and India. CEO Doug McMillon highlighted Walmart’s ability to attract higher-income households and maintain momentum across key product categories, noting, “We’re gaining market share in grocery and general merchandise, including here in the U.S., where we saw strength across income cohorts and especially with higher income households.”

Management’s updated outlook is anchored by continued investments in technology, automation, and value-driven pricing, aiming to drive profit growth faster than sales. Outgoing CEO Doug McMillon pointed to advancements in Walmart’s AI-powered digital experience and supply chain efficiency, while incoming CEO John Furner emphasized the company’s commitment to disciplined capital allocation. CFO John Rainey stated, “We’re not giving up on our goal of growing profits faster than sales,” underscoring confidence in the company’s ability to manage costs and navigate dynamic consumer trends.

Key Insights from Management’s Remarks

Walmart’s leadership credited this quarter’s performance to a combination of international market strength, technology adoption, and disciplined cost management, while e-commerce and membership programs emerged as standouts.

• International momentum: Walmart’s international segment, particularly in China and India, saw double-digit sales gains, with China e-commerce penetration reaching 50% and India’s Flipkart achieving rapid growth during the Big Billion Days event.
• E-commerce acceleration: E-commerce sales rose over 27% globally, driven by faster delivery times and expanded assortment, with 35% of U.S. digital orders delivered within three hours and robust growth in Walmart’s marketplace.
• Advertising and membership income: Advertising revenue grew 53% globally, and membership income increased 17%, fueled by higher adoption of Walmart+ and Sam’s Club memberships, especially among younger demographics.
• Supply chain automation: Over half of Walmart’s U.S. e-commerce fulfillment now leverages automation, reducing shipping costs and improving inventory management, which supports both profitability and delivery speed.
• AI integration: Management highlighted rapid adoption of agentic AI for both customer-facing experiences and internal operations, including predictive basket creation and software development, setting the foundation for further efficiency gains.

Drivers of Future Performance

Walmart expects technology investments, omnichannel growth, and a focus on affordability to shape its outlook for the remainder of the year and beyond.

• AI and automation expansion: Management views continued roll-out of AI-powered shopping experiences, predictive inventory systems, and automated supply chain processes as key to driving efficiency, personalization, and faster delivery, which they believe will underpin margin improvement.
• Market mix and consumer trends: While international and higher-margin businesses like advertising and membership continue to grow, management warned that ongoing shifts in merchandise category mix and moderation among lower-income U.S. consumers could remain headwinds.
• Tariffs and regulatory changes: Leadership acknowledged that tariffs and new healthcare pricing legislation could impact costs and pharmacy revenues, but expressed confidence in offsetting these through disciplined inventory management, supplier negotiations, and value positioning.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be tracking (1) the pace of adoption and revenue impact of Walmart’s agentic AI and supply chain automation, (2) continued international strength, especially in China, India, and Mexico, and (3) the resilience of U.S. consumer spending across income levels. Execution in advertising, membership, and marketplace growth will also serve as important indicators of performance.

Walmart currently trades at $106.95, up from $100.70 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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