The future of retail is AI, and Walmart stock sits right at the heart of it

Walmart Inc’s (NASDAQ: WMT) recent earnings release featuring “record” contribution (23% of overall sales) from e-commerce confirms it’s no longer just a brick-and-mortar giant.

Instead, it has successfully transformed into a tech powerhouse in disguise, says TD Cowen analyst Oliver Chen.

Despite “some pressure on the lowest income cohort,” Walmart topped Street estimates in its fiscal Q4, reinforcing that its massive scale and “people-led, tech-powered” strategy is paying off.     

While the retail behemoth offered cautious guidance for the full year, WMT remained resilient on Feb. 19, indicating market’s confidence in its structural transformation.

More importantly, the company is exceptionally well-positioned for the artificial intelligence (AI) era – and that alone is a strong enough reason to load up on Walmart stock at current levels, Chen noted.  

Walmart stock is strongly positioned for AI

In a post-earnings interview with CNBC, Oliver Chen argued Walmart’s primary advantage lies in its ability to lead the “big shift from shopping lists to solutions.”

The multinational’s AI assistant (Sparky) is already delivering “real tangible results,” with roughly half of mobile users engaging with it to navigate their shopping needs.

And the financial impact is significant: “When people use Sparky, they order some 35% more” the TD Cowen analyst explained.

By moving toward “agentic commerce”, Walmart Inc is using AI to understand complex customer intent – like planning a birthday party or a camping trip – rather than reacting only to keywords.

This transition is turning artificial intelligence engagement into “immediate” physical outcomes – making WMT shares all the more attractive to own in 2026.

WMT shares aren’t expensive to own in 2026

While some investors balk at Walmart’s valuation – trading at about 37x its fiscal 2027 earnings – Chen argued the premium is more than deserved.

According to him, the retailer’s high-margin revenue streams like digital advertising help “justify” its forward multiple.  

Walmart Connect is already generating over $6 billion in revenue and is growing at a “remarkable” 20% to 40% clip – and given that Google or Amazon bring in hundreds of billions in ad revenue, WMT has a massive “runway for growth”.

Investors are willing to pay a higher multiple for Walmart shares because they’re “paying for lower standard deviation and more certainty” in an unpredictable economy, the analyst added.  

Walmart’s conservative guidance shouldn’t deter investors

On “Squawk on the Street”, Chen also recommended that long-term investors remain “undeterred” despite Walmart’s muted outlook because it’s a “conservative guider”.

Historically, this Nasdaq-listed firm sets the bar low only to raise it later as the year progresses.

All in all, the TD Cowen expert reiterated Walmart Inc as a “top idea” for 2026 – saying its focus on free cash flow and consistent buyback provide what he called a structural floor for WMT shares.