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- Walmart has hit $1 trillion in market cap, becoming the second non-tech company alongside Berkshire Hathaway to become a trillion-dollar company.
- Investors doubted Walmart ten years ago, with Berkshire Hathaway selling its whole stake in 2018.
- Walmart has turned things around since then, improving its stores and wages, maintaining its customer base, adopting AI, and competing with its main rivals in the E-commerce space.
Walmart has pushed its way into the $1 trillion club and become the first traditional retailer to do so.
The retail giant achieved the feat on Tuesday after its shares hit a record high of $128.
A Select Group of Giants
The milestone brings Walmart into the trillion-dollar club, alongside a small handful of names with 13-figure valuations.
The group includes tech giants like Nvidia, Amazon, Microsoft, Meta Platforms, Apple, Alphabet, Tesla, and Broadcom. Among these companies, only two are non-tech firms.
Walmart, and investment firm, Berkshire Hathaway.
Nvidia currently leads the pack with a market cap of $4.37 trillion, showing just how much room there is at the top. Eli Lilly briefly joined this exclusive group in November before its valuation dropped to $949 billion. ⁽¹⁾
From Doubt to Dominance
A decade ago, Walmart’s success was a forgotten story, as its major rival, Amazon, grew rapidly. Investors were also pessimistic about its former CEO Doug McMillon’s strategy of spending huge amounts to raise wages, renovating stores and expanding its online operations. ⁽²⁾
Back in 2016, Walmart’s market value stood at just $212 billion. That same year, Warren Buffett’s Berkshire Hathaway sold a large portion of its longtime Walmart stake and was completely exited by 2018. ⁽³⁾
While Buffett offered encouraging words about Walmart’s potential, the decision to sell motivated company executives to prove themselves. ⁽⁴⁾
The Winning Formula
Walmart’s transformation relied on several key strategies that helped it think more like a tech company:
E-commerce Growth
The company’s online business has become profitable and continues to expand. Walmart can now deliver orders the same day to 95% of US households. ⁽⁵⁾
Appealing to All Shoppers
When inflation hit in 2022, Walmart became a go-to destination for consumers seeking low prices. Even wealthier shoppers started turning to Walmart for value. The company also expanded its product selection to include trendy small appliances and quality store-brand foods. ⁽⁶⁾
Technology Investments
Walmart automated many warehouse tasks and invested heavily in artificial intelligence. These moves helped keep the global workforce steady at around 2.1 million employees even as revenue grew, creating significant cost savings. ⁽⁷⁾
Digital Advertising
The company entered the high-margin digital advertising business, allowing brands to buy ad space within its online ecosystem. Operating margins on digital ads can reach 60% to 80%. ⁽⁸⁾
AI Integration
Walmart has put its own AI shopping assistant called “Sparky” to use, which helps its customers with their recommendations. The company also collaborated with OpenAI’s product ChatGPT for shopping features and with Google’s Gemini to display Walmart’s products in search results. ⁽⁹⁾
Embracing Tech Culture
Walmart’s stock has been transferred from being traded on the New York Stock Exchange to the Nasdaq exchange, as it increasingly aligns with the technology sector, signaling its evolution from a traditional retailer into a technology-driven business.
What’s Next for Walmart?
Walmart has been on a tear lately. Its stock has jumped 136% over the past three years and is up another 14.5% just this year.
But experts warn that keeping that shiny trillion-dollar valuation won’t be easy. The company will need to hit profit margins it hasn’t seen in more than a decade, and those big tech investments they’ve been making? Investors need to see if these investments will pay off.
