$WMT hit a $1 trillion market cap on February 3rd. The stock is up over 20% in 2026 alone. And tomorrow morning, Wall Street finds out if the world's largest retailer actually earned that milestone — or if it's running on fumes.
Walmart reports Q4 FY2026 before the bell on February 19th. The consensus says $0.73 EPS on roughly $189 billion in revenue. Both would be records. But the real story isn't the numbers. It's who's shopping at Walmart now.
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The Rich Are Shopping at Walmart
This is the stat that changed everything: 75% of Walmart's recent market share gains came from households earning over $100,000 a year.
Read that again. Three-quarters of new share gains are coming from people who used to shop at Whole Foods and Target. They're not trading down out of desperation — they're trading down because Walmart's "Everyday Low Price" promise on groceries actually works, and the delivery infrastructure now matches Amazon's in most markets.
CEO John Furner's "store-as-hub" strategy turned 4,700 U.S. locations into distribution centers. Same-day delivery now reaches 95% of the American population. When your local Walmart doubles as a fulfillment center, the convenience gap with Amazon shrinks to almost nothing.
| What to Watch | Consensus | Q4 FY2025 | YoY Change |
|---|---|---|---|
| Adjusted EPS | $0.73 | $0.66 | +10.6% |
| Revenue | ~$189B | ~$179B | +5.4% |
| U.S. Comp Sales (ex-fuel) | +4.1% | +4.9% | — |
| Operating Income | ~$8.6B | ~$7.8B | +10.9% |
Foot traffic surged 4.1% in January alone. For context, Target managed 0.7%.
The Margin Story Is the Real Story
Walmart used to be a low-margin grinder — move enormous volume, scrape a few points of profit. That math is changing.
Walmart Connect, the company's advertising business, grew over 30% last year. High-margin, recurring, and scaling fast. When CPG brands pay Walmart to promote products on its app and in-store screens, the margin profile looks more like a tech company than a grocer.
E-commerce profitability finally crossed a critical threshold in FY2026. After years of subsidizing delivery and pickup to compete with Amazon, the unit economics now work. E-commerce penetration is above 20% in key segments and climbing.
Walmart+ membership continues to grow, though the company hasn't disclosed exact numbers. The subscription model — $98/year for free delivery, fuel discounts, and Paramount+ — creates sticky recurring revenue that doesn't depend on foot traffic.
Add it all up and you get a retailer that's quietly building a high-margin ecosystem on top of a low-margin core. The advertising, fulfillment-as-a-service, and membership layers are where the growth is. The grocery business is the distribution moat that makes it all work.
The Valuation Problem
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Here's where it gets tricky. $WMT trades at roughly 37x forward earnings — expensive for a retailer. Costco is the only comparable at that level. Target trades at 15x. The premium reflects the "Walmart is a tech company now" thesis, but it leaves zero room for a miss.
The stock is up 28% over the past year. If Q4 comes in at consensus, that's already priced in. The market needs either a beat on the top line, stronger-than-expected guidance for FY2027, or both. Anything less and you're looking at a sell-the-news setup.
Tariff risk is the wildcard. Walmart imports heavily from China and Mexico. While the company has been diversifying its supply chain for years, any new tariff headlines between now and March could spook investors. The good news: FY2027 tariff comparisons get easier as the base effect of prior-year disruptions kicks in.
The Bear Case
At $1 trillion, the bar is impossibly high. Comp sales growth of 4.1% is solid — but it's decelerating from 4.9% a year ago. If the affluent consumer trade-down was a temporary inflation response rather than a structural shift, Walmart gives back share as fast as it gained it.
Margins are improving but still thin by absolute standards. Operating income of $8.6 billion on $189 billion in revenue is a 4.6% margin. Walmart Connect is growing fast, but it's still a rounding error on total revenue. The "tech company" re-rating needs years of execution to justify.
And if the consumer weakens — really weakens — even Walmart feels it. Grocery is defensive, but discretionary categories still matter.
Bottom Line
Walmart going into tomorrow's print is the strongest it's been in a decade. The affluent customer capture, the advertising flywheel, the e-commerce profitability — it's all clicking. The question is whether any of that is new information at 37x earnings and a $1 trillion cap.
We'd watch two things: FY2027 guidance (does management see the comp deceleration stabilizing?) and Walmart Connect growth (is the advertising flywheel accelerating or plateauing?). If both come in hot, the premium valuation holds. If either wobbles, the sell-the-news crowd will be loud.
This is a great business at a rich price. Tomorrow tells us if the market is paying for execution or hope.
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