What Could Send Walmart Stock Higher?
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Walmart (WMT) stock returned 23.7% over the past year, against 12.8% for the S&P 500. Buyers appear to be betting that Walmart can earn more on each dollar it sells. For that to hold, parts of the business beyond its store shelves must keep growing fast and deliver higher profits. So what is Walmart selling besides groceries and general goods, and is it working yet?
Walmart’s Ads, Marketplace And Memberships Are Growing Fast
Walmart sells advertising, runs a marketplace for outside sellers and charges for memberships, and in fiscal Q2 2027 all three grew far faster than the company. On its August 20, 2026 call, management said global advertising rose 38%, with Walmart Connect, part of its U.S. ad business, up 43%.
U.S. sales from the marketplace and the fulfillment services Walmart sells to those sellers rose 52%. The company’s paid membership, Walmart+, posted double-digit growth, and membership fee revenue rose 17%. Enterprise net sales grew 5% in constant currency over the same quarter, and membership fees, the slowest of the three, still grew more than three times as fast.
There is early proof that these sales pay. Management said Walmart U.S. e-commerce achieved double-digit incremental margins in the first half of the year, driven by strong ad and membership revenue, a denser delivery network, growth in fee-based fast deliveries, and automation. Each extra dollar of online sales now adds at least ten cents of profit, by management’s measure.
Has Walmart’s Profit Margin Widened Yet?
A little. Walmart recorded an operating margin of 4.4% over the twelve months to July 31, 2026, against 4.2% a year earlier. Operating income rose about 11% against revenue growth of 6.2%, so profit did grow faster than sales.
Yet the margin is still thin: the S&P 500, taken as one company, has an operating margin of 19.0%. Walmart sold $736 billion of goods and services over those twelve months, so even fast-growing businesses on top of its stores are likely to lift its margin a fraction of a point at a time.
The price appears to assume that lift keeps coming. Walmart trades at 45.3 times its trailing earnings, against 21.9 for the S&P 500. The shares closed on November 11, 2026, 6.1% below their highest close of the past year, set on May 19.
What Could Undo Walmart’s Margin Gain?
One-off money from tariff refunds, and how Walmart spends it. Management said operating income growth in fiscal Q2 2027 included a net benefit of about 750 basis points from tariff refunds on its adjusted measure. On that measure, operating income rose over 17% in constant currency, and growth without the refunds was at the top end of management’s 7% to 10% guide. Walmart has received substantially all of about $2.9 billion in refunds. It is putting that money back into lower prices and the customer experience, with the impact largely contained within fiscal year 2027.
The latest twelve-month margin includes that refund quarter, so it does not show how much of the gain came from ads and memberships alone. Costs are also moving the other way: management expects more than $2 billion of extra fuel costs in fiscal year 2027.
Walmart faced a question on the August 20 call about how it keeps prices low once the refund money is spent. Management said it runs the business on a multiyear basis. In a separate answer, it said it expects operating income in what it called 2027 and later years to grow much faster than sales.
If ad and membership growth slows, or if profit stops outpacing sales once the refunds are spent, you would own a retailer growing at a retailer’s pace, priced well above the market. So far, those newer businesses are growing fast, while their lift to the margin is harder to see past the refunds. Walmart is expected to report in November 2026. Its operating income growth for fiscal Q3 2027, against management’s guide of 2% to 4%, is the number to watch then. That constant-currency guide includes planned reinvestment of tariff refunds. Management expects Q3 sales growth of 3% to 3.75%. At the midpoints, that has profit growing slightly slower than sales in Q3.
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