Market capitalization surpasses $1 trillion! Walmart completes a "profound transformation of traditional retail companies," doubling its stock price in two years

Walmart’s market capitalization surpassed $1 trillion on Tuesday, becoming the first traditional retailer to reach this milestone and joining the elite club previously dominated by tech giants. The Arkansas-based retail giant’s stock has more than doubled over the past two years, outperforming the S&P 500 index.

Currently, nine U.S.-listed companies have a market value exceeding $1 trillion, with Walmart and Berkshire Hathaway being the only two non-tech companies in the group; the rest are all technology firms.

This achievement marks the successful transformation of Walmart over the past decade. The company has invested hundreds of billions of dollars in developing its e-commerce business and is now a strong competitor to Amazon. Its online operations achieved profitability for the first time last year, and it is expected that the annual e-commerce sales will reach approximately $140 billion when earnings are announced this month.

Walmart’s stock closed up 2.9% at $127.71 on Tuesday, with a market cap of $1.018 trillion. This breakthrough coincided with the first week of new CEO John Furner’s tenure, who took over from Doug McMillon, who led the company for over a decade.

E-commerce Business Becomes Growth Engine

The core of Walmart’s transformation lies in the rapid expansion of its e-commerce operations. Analysts expect that, when the company reports its earnings this month, annual revenue will exceed $700 billion. However, according to Visible Alpha data, Amazon’s revenue is expected to surpass Walmart’s for the first time.

Despite this, Walmart’s progress in e-commerce is significant. The company now offers same-day delivery to 95% of American households. Last year, its e-commerce division achieved profitability for the first time as an independent unit, a moment investors had been waiting for years.

Morgan Stanley retail analyst Simeon Gutman said that Walmart’s changes over the past decade “are the most profound transformation we’ve seen in a retail company.” He pointed out that the growth of Walmart and Amazon poses a challenge to competitors.

Technology Investments Drive Valuation Reassessment

Walmart is actively embracing artificial intelligence and automation technologies, attracting investor enthusiasm for tech stocks. The company has partnered with OpenAI and Google to integrate online shopping into their search chatbots. The Walmart app features an embedded chatbot, Sparky, which can recommend products and assist customers in purchasing items based on queries.

Research firm Optimal Advisory managing partner David Schick said that Walmart’s “combination of workforce, procurement, and technology” underpins its success. He added that the company benefits from “investing during uncertain times” while competing against “strong” rivals like Amazon and Costco.

Investments in automation have led to cost savings. Despite revenue growth, Walmart has maintained a global workforce of about 2.1 million employees in recent years. In December last year, Walmart moved its stock listing from the New York Stock Exchange to Nasdaq and joined the tech-heavy Nasdaq 100 index, attracting passive funds that track this benchmark.

Decade-Long Transformation Reverses Investor Doubts

Ten years ago, Walmart’s success was not guaranteed. At that time, Amazon was growing rapidly, and new CEO McMillon invested billions of dollars to raise employee wages, improve stores, and develop online business. Investors watched to see if these investments would pay off.

By the end of 2016, Walmart’s market cap was only $212 billion. According to insiders, Berkshire Hathaway, Warren Buffett’s company, sold most of its long-held Walmart shares that year and completely exited in 2018. Buffett explained that when McMillon called to ask about the sales, “the retail industry had changed so much that I felt I didn’t understand it as well as I needed to.”

Since then, Walmart’s sales have soared, first driven by e-commerce, then by the pandemic, and recently by consumers seeking low prices amid inflation. The company has worked to offer more products that appeal to high-income shoppers, such as fashionable small appliances and private-label foods.

Valuation Still Below Tech Giants

Walmart’s market value remains far below that of e-commerce giant Amazon, which is worth $2.6 trillion. In the trillion-dollar club, Nvidia leads with approximately $4.4 trillion, followed by Apple, Microsoft, Amazon, Alphabet, and Broadcom.

As a major importer of goods in the U.S., Walmart has had to contend with tariffs imposed by President Trump over the past year. Jefferies estimates that Walmart and its suppliers have absorbed about two-thirds of the tariffs on general merchandise, passing the remaining one-third onto consumers. Walmart executives say that its lower prices provide an opportunity to gain market share from competitors.

The company’s soaring valuation will increase the wealth of the Walton family, the largest shareholders, who collectively hold 44% of Walmart shares, currently valued at over $440 billion. Founded by Sam Walton in 1962, this single-store retailer has now expanded to nearly 11,000 stores worldwide.

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