Walmart's market cap has slipped from $1 trillion to roughly $850 billion, and investors shouldn't bank on a quick return to that mark. Decelerating online-advertising growth and a Fed rate hike are adding pressure just as the retailer's revenue growth slows.
Walmart reached a $1 trillion valuation earlier this year but has since drifted below that mark, with its market cap sitting above $850 billion. Investors shouldn't bank on the retailer reclaiming a $1 trillion market cap anytime soon.
Growth has slowed to a mature-company pace
Walmart posted only a 4% compound annual growth rate in revenue over the past decade, a sign of a mature company rather than a fast grower. Revenue growth ticked up to 5.9% year over year in its fiscal 2027 second quarter. Still, earnings per share dipped 9.1% year over year over the same stretch.
That slowdown puts pressure on Walmart's 39 P/E ratio, a premium that looks harder to justify next to Amazon's 20 P/E and Target's 16 P/E. Guidance points to revenue growth of up to 3.75% year over year in fiscal 2027's third quarter, and that outlook was issued before the Fed's latest interest rate hike. Another rate hike promised by the end of the year could slow growth even more.
Advertising growth is decelerating too
Walmart typically runs a net profit margin around 3%, and online advertising was meant to help lift that margin over time. However, that segment's growth is fading. Global advertising revenue rose 46% year over year in fiscal 2026, but it climbed only 38% year over year in fiscal 2027's second quarter.
If advertising keeps decelerating, it may never grow large enough within Walmart's overall business to meaningfully lift margins. Without reaccelerated growth, Walmart's premium valuation over Amazon and Target becomes harder to defend in coming quarters.
Source: The Motley Fool
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