There's a scene in Whiplash where the guy plays the drums nearly perfectly — blood on his fingers, sweat dripping — and the psycho teacher says: "Not quite my tempo."
That's exactly what Wall Street did to Walmart on Thursday.
The planet's biggest retailer (or is it still? I'll get to that) delivered a fiscal fourth quarter with nearly 6% sales growth, beat earnings per share estimates (74 cents adjusted vs. 73 expected) and revenue ($190.66 billion vs. $190.43 billion expected). E-commerce flying. Third-party marketplace growing. Advertising printing money. Even rich people — yeah, families making over $100K a year — are shopping at Walmart more.
And what did the market do? Knocked the stock down 1.38%.
Damn, talk about ungrateful.
The unforgivable crime: "weak" guidance
Walmart's sin wasn't last quarter. It was the future. The full fiscal year earnings per share projection came in between $2.75 and $2.85. Wall Street wanted $2.96.
Eleven cents of difference. That's it. Eleven lousy cents between "phenomenal company" and "sell everything."
That says more about the inflated expectations of analysts sitting in air-conditioned offices than about the actual health of the business. Walmart is growing U.S. comparable sales at 4.6%, gaining market share across every income bracket, and CFO John David Rainey — the guy who actually counts the money — said product inflation is normalizing around 1%.
Translation from econ-speak: prices are done skyrocketing, and Walmart is absorbing the impact of Trump's tariffs better than the competition. Scale is power, my friend.
The elephant in the room: Amazon passed Walmart
Here's the plot twist most people aren't fully digesting.
For the first time in history, Amazon surpassed Walmart in annual revenue. $716.9 billion versus $713.2 billion. It's the corporate equivalent of that scene in Rocky IV where Drago finally lands the punch.
Sure, the comparison is a bit apples-to-oranges — a big chunk of Amazon's revenue comes from AWS (cloud computing), not from selling laundry detergent. But the symbolism is brutal. And Doug McMillon, who was CEO until February 1st, knew it. No wonder Walmart has been following Amazon's playbook: third-party marketplace, digital advertising, fast deliveries straight from stores.
New CEO John Furner inherited this mission. This is the first earnings report under his watch, and the message is crystal clear: Walmart isn't "just" a giant supermarket anymore. It's a platform.
What actually matters here
Net income dropped — from $5.25 billion last year to $4.24 billion. But before you run for the exits, understand: a big chunk of that decline comes from accounting adjustments (investment gains and losses, legal settlements, restructuring). Adjusted earnings per share went up.
The real story is something else entirely. Walmart is:
- Winning over high-income customers — fashion grew in the mid-single digits for the quarter, and almost all of that growth came from households earning over $100K/year
- Dominating fast delivery — delivery speed from stores is becoming a real competitive advantage
- Diversifying revenue — ads and marketplace carry way fatter margins than selling bananas
And the stock, even after Thursday's drop? Up 20% over 12 months and 12% year-to-date. The S&P 500 did 12% over 12 months and less than 1% YTD. In other words: Walmart is crushing the index.
The question nobody wants to answer
Rainey said the tariff impact has been "largely absorbed" by retail. Looks great on a PowerPoint. But Walmart has bargaining power that 95% of American retailers don't. Extrapolating Walmart's health to the rest of the economy is like looking at LeBron James and concluding that every 40-year-old is in great shape.
So here's the real question: are you buying Walmart at 20% up on the year because you believe in the platform thesis — or because you're following the herd that already drove the price up?
Because in the market, as Taleb would say, whoever shows up late to the party is the one stuck paying the bar tab.
