Walmart Connect Ads Up 31%: Can Digital Ads Become a Core Driver?

Walmart Inc.’s WMT second-quarter fiscal 2026 results highlight the retailer’s evolving business model in the rapidly expanding digital advertisement space. Walmart Connect, the company's U.S. digital advertising platform, delivered a stellar performance in the second quarter, posting 31% year-over-year growth, excluding VIZIO. The expansion of this non-core retail revenue stream is a critical component of Walmart’s broader vision.

The company’s global advertising revenues climbed 46% during the quarter, with management attributing this momentum to stronger marketplace adoption and rising engagement from brand partners. Advertising at Sam’s Club U.S. climbed 24%, while international markets, such as Flipkart, added 15% to the growth.

Management hinted that higher-margin businesses such as advertising and membership are redefining the income statement. The shift reflects a long-term strategy to diversify beyond traditional retail margins by monetizing Walmart’s omnichannel reach and integrating its digital and physical networks. Advertising tied to e-commerce, marketplace sellers and the recent addition of VIZIO is increasingly contributing to profitability, offering financial flexibility even amid cost pressures.

Walmart Connect benefits from the company’s extensive ecosystem, reaching millions of shoppers both in-store and online. By integrating ads across physical and digital channels, Walmart continues to leverage its scale advantage. CFO John David Rainey highlighted that these high-margin growth areas are becoming profit drivers, helping offset rising expenses. 

As retail media grows faster than core retail sales, Walmart’s advertising momentum could evolve into one of its significant growth catalysts.

What the Latest Metrics Say About Walmart

Walmart, which competes with Costco Wholesale Corporation COST and Target Corporation TGT, has seen its shares rally 26.8% in the past year compared with the industry’s growth of 28.2%. Shares of Costco have advanced 5.1%, while Target declined 34.6% in the aforementioned period.
 

From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 36.29, higher than the industry’s 33.59. WMT carries a Value Score of C. Walmart is trading at a premium to Target (with a forward 12-month P/E ratio of 12.26) but at a discount to Costco (45.60). 
 

The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings per share implies year-over-year growth of 4.1% and 3.6%, respectively. 
 

Walmart currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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