Walmart (NYSE: WMT) has been one of the biggest success stories in the stock market over the past decade. The retail giant has rewarded shareholders with impressive gains, transformed its business through e-commerce and artificial intelligence (AI), and even crossed the $1 trillion market value earlier this year. But lately, the story has changed.
After reaching an all-time high of $134.20 in May 2026, Walmart shares have fallen more than 19%, recently trading around $111. Could the decline be just a temporary pullback, or is Walmart starting to slow? The answer may lie somewhere in the middle.
Walmart Is Now Much More Than a Retailer
Walmart was known mainly as the world's largest discount retailer. Today, it does much more. The company has built an omnichannel business that combines physical stores with online shopping, delivery services, and digital advertising, among others.
Its e-commerce business continues to grow rapidly, while Walmart Connect, its advertising platform, is now one of the company's fastest-growing and highest-margin businesses. Advertising revenue climbed 37% year over year, giving Walmart another profitable source of income beyond traditional retail sales.
Meanwhile, nearly 280 million customers shop at Walmart every week, giving the company enormous purchasing power with suppliers and helping it maintain its famous "Everyday Low Prices."
Even more impressive is the growing number of higher-income shoppers. During the recent inflationary period, Walmart executives said customers earning more than $100,000 annually have increasingly turned to Walmart to save money.
That trend has helped Walmart continue taking market share from competitors.
AI Is Making Walmart Stronger
Perhaps the biggest reason investors are more optimistic about Walmart is artificial intelligence. Unlike many companies that only recently started discussing AI, Walmart has been investing in the technology since 2017.
The company launched Store No. 8, an innovation lab that experimented with AI-powered retail technologies, including computer vision, smart cameras, and automated inventory systems. Around the same time, Walmart created its AI Center of Excellence to improve warehouse automation and supply chain operations.
Those investments are now beginning to pay off.
For fiscal 2026, Walmart generated approximately $713 billion in revenue, up nearly 5% from the previous year.
Management says AI is helping improve inventory management, speed up deliveries, reduce operating costs, and personalize the shopping experience.
Its AI shopping assistant, Sparky, has been especially successful. According to management, customers using Sparky placed orders that were 35% larger on average than other shoppers.
CEO John Furner said AI is helping Walmart reduce friction, simplify decisions, improve inventory visibility, and create a better shopping experience while maintaining customer trust.
This growing use of AI is one reason Walmart no longer looks like a traditional retailer. It increasingly resembles a technology platform that also happens to sell groceries.
The company's move from the New York Stock Exchange to the Nasdaq in late 2025 further highlighted that transformation.
Financial Results Continue to Impress
Walmart's business remains remarkably resilient.
During the latest reported quarter, revenue climbed 7.3% to $177.8 billion, beating analyst expectations. Adjusted earnings per share came in at $0.66, matching estimates.
Comparable sales at Walmart U.S. increased 4.1%, driven mainly by stronger customer traffic.
For the second quarter, analysts expect earnings of approximately $0.74 per share on revenue of $186.9 billion.
Management expects quarterly sales growth between 4% and 5% while reaffirming its full-year outlook for adjusted earnings between $2.75 and $2.85 per share and net sales growth of 3.5% to 4.5%.
Another reason investors continue to like Walmart is its consistency.
Groceries still account for around 60% of total sales, providing dependable customer traffic even during economic slowdowns.
Historically, discount retailers perform well when consumers are more cautious because families continue buying essential items while searching for lower prices.
As CFO John David Rainey previously explained, even when budgets are tighter, people still need groceries, and food remains Walmart's largest business.
So Why Has Walmart Stock Fallen?
Earlier this week, Oppenheimer downgraded Walmart from Outperform to Perform, saying the near-term risk-reward no longer looks attractive.
The investment firm pointed to several concerns.
First, pharmacy-related changes under the Inflation Reduction Act could slow Walmart's comparable sales growth during the second quarter.
Oppenheimer now expects Walmart U.S. comparable sales growth of around 3%, below Wall Street's estimate of 3.8%.
The firm also believes Walmart's valuation remains expensive.
Although the stock has fallen sharply from its highs, it still trades at 39 times forward earnings, well above its long-term historical average near 23 times.
Even after the pullback, Walmart's valuation remains much richer than both its own history and the broader market.
Analysts also worry that slowing consumer spending, rising logistics costs, higher labor expenses, and increased discounting across the retail industry could pressure profit margins.
Competitors like Target and Aldi have been cutting prices aggressively, making it harder for Walmart to protect its already thin margins.
The company typically operates with net profit margins of only 2.5% to 3%, meaning even small increases in costs can affect earnings.
Adding to investor caution, members of the Walton family recently sold roughly $1.5 billion worth of Walmart shares, prompting questions about whether insiders believe the stock is now fully valued.
Is Walmart Stock Still Worth Buying?
The debate largely comes down to valuation versus business quality.
There is little doubt Walmart remains one of the strongest companies in retail. It generated more than $713 billion in annual revenue, continues gaining customers, is expanding advertising and membership businesses, and is becoming increasingly efficient through AI.
The company has also delivered exceptional long-term returns. A $10,000 investment made 10 years ago would now be worth about $55,200, while the stock has gained roughly 463% during that period.
Long-term shareholders have benefited even though the stock has recently declined.
At today's price near $111, some analysts believe Walmart offers an attractive entry point. Some estimates place fair value around $154.58, suggesting the stock could be undervalued. However, some estimates are more conservative placing fair value closer to $94, showing that valuation remains a topic of debate.