Walmart Q4 Earnings: Focus on AI, Tariffs as Stock Outpaces S&P 500
Walmart Q4 Earnings: Focus on AI, Tariffs as Stock Outpaces S&P 500
- Walmart is expected to report earnings on Thursday, February 19.
- Artificial intelligence, cost reduction, and customer experience enhancement are all in focus.
- Traders expect Walmart to post earnings per share of $0.73 on $190.5 billion in revenue.
Walmart Q4 earnings are set to focus on AI adoption, improving costs
Walmart (WMT) is scheduled to report earnings on Thursday, February 19, before the market open. The fourth-quarter results capture period from November 1 to January 31. A conference call with management is set for 7 a.m. CST.
Since the last quarter, Walmart has undergone a change in leadership. John Furner started as chief executive officer (CEO) of Walmart at the start of the month. While the change isn’t expected to yield major strategic shifts, it emphasizes continuity in the company’s direction and offers a stable operational outlook.
Since the last quarter, Walmart has undergone a change in leadership. John Furner started as chief executive officer (CEO) of Walmart at the start of the month. While the change isn’t expected to yield major strategic shifts, it emphasizes continuity in the company’s direction and offers a stable operational outlook.
The big push is now integrating artificial intelligence into Walmart’s business to improve cost efficiency and productivity. Last quarter, leadership said that 60% of stores are taking freight via automated distribution centers in Walmart US. That’s lead to improved unit productivity, according to management. Moreover, half of eCommerce fulfillment center volume was automated as of last quarter.
Management also touted strong engagement with “Sparky,” the in-app digital agent for Walmart. More automated actions to help customers are expected to come over the next few months, as management mentioned on last quarter’s earnings call. One example given was that the app will give “nudges” to customers on things they regularly buy, which would be essentials such as paper towels, etc. Investors expect to hear how these AI integrations in the operations and customer-facing sides are expected to progress.
Walmart is also moving to equip its employees with more AI help in the workplace. Associates will be encouraged to pursue OpenAI certifications. Executives noted that 40% of new code in their software development is now AI generated or assisted. The goal of these AI integrations for Walmart is to lower the cost to serve, which is the total cost to get a product to a customer.
What do investors expect?
According to TradingView, Walmart is estimated to post earnings per share (EPS) of $0.73 on $190.5 billion in revenue. That would compare to an EPS of $0.66 on $180.6 billion in revenue a year ago. Last quarter, Walmart posted EPS of $0.62 on $179.5 billion in revenue.
Walmart beat on EPS and revenue last quarter and in the fourth quarter of last year. In last quarter’s guidance, Walmart projected an EPS of $0.67 to $0.72 for the fourth quarter. Management also noted that inventory management remains strong despite tariff impacts. Walmart US inventory increased 2.6% last quarter.
Trading Walmart earnings
Walmart’s implied volatility rank (IVR) has increased ahead of the earnings report, aligning with the trend since the start of the year. IVR was at 54.8 as of February 13. The increase in IVR has come alongside a stock price increase. Since the start of the year, Walmart is up over 20%. That is well above a nearly flat S&P 500. Despite a mixed jobs report and muted price action in the broader market, Walmart continues to notch fresh all-time highs.
The 21-day exponential moving average (EMA) continues to support prices, a trend that has been in place since the start of the year. More recently, the 9-day EMA is supporting pullbacks. If earnings causes a pullback, these EMAs might support prices.
The options market sees a +/- 7.28 point move, which is a 5.4% move of Friday’s stock price of around 134. The high/low range is displayed on the daily price chart below. A downside move would leave WMT above its 21-day EMA. That could leave dip buyers confident enough to buy WMT. Selling a put spread at or below the expected move is a hypothetical trade that is viable given the healthy IVR.
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