Walmart Q3 earnings: Sales surge thanks to bargain hunters

Walmart raised its full-year earnings and sales outlook ahead of the holiday season after reporting U.S. same-store sales up 4.5% for the quarter ended Oct. 31 and global e-commerce growth of 27%, driving a >6% one-day share gain and roughly 18% YTD performance. Grocery and health-and-wellness categories led growth as middle-income shoppers held up despite pressure on lower-income households; Walmart U.S. prices rose about 1% overall with tariffs contributing to higher electronics, toys and beef costs. The company signaled a strategic shift toward higher-income customers and technology—announcing a move from the NYSE to Nasdaq and a partnership with OpenAI to enable purchases via ChatGPT—while preparing a leadership transition (Doug McMillon out, John Furner in Feb. 1) and outpacing rival Target, which reported weaker sales and cut guidance.

Analysis

Walmart raised its full-year earnings and sales outlook ahead of the holiday season after reporting U.S. same-store sales up 4.5% for the quarter ended Oct. 31—beating expectations—and global e-commerce growth of 27%. The stock rallied more than 6% on the day and is up roughly 18% year-to-date, driven by stronger grocery and health-and-wellness sales while general merchandise lagged; CFO John David Rainey highlighted consumers reallocating dollars to necessities as lower-income households face pressure but middle-income shoppers remain resilient.

Management signaled a strategic shift toward technology and higher-income shoppers by announcing a move from the NYSE to Nasdaq and a partnership with OpenAI to allow purchases via ChatGPT, though terms and timing were not disclosed. Outgoing CEO Doug McMillon will step down with John Furner taking over Feb. 1, preserving operational continuity in the U.S., and Walmart framed results as market-share gains against peers—Target reported weaker Q3 sales and cut guidance.

Tariff pressures lifted Walmart U.S. prices about 1% in the quarter with electronics, toys and seasonal items particularly affected and beef expected to remain high, creating potential margin pressure where the company is selectively passing through costs and absorbing others. E-commerce momentum, improved delivery speed and inventory management support the upgraded outlook, but investors should watch holiday execution, tariff developments and clarity on the OpenAI initiative for near-term earnings impact.

Key Decisions for Investors

• Consider increasing exposure to WMT relative to peers given the raised guidance, 4.5% comp growth and 27% e-commerce growth, but limit size until tariff and margin impacts are clearer
• Monitor daily same-store sales cadence, e-commerce conversion and delivery speed metrics, and any management updates on tariff pass-throughs or cost absorption ahead of holiday results
• Treat the OpenAI partnership and Nasdaq move as strategic positives but do not assume near-term earnings upside until terms or launch timing are disclosed
• Be prepared to hedge or trim exposure if sequential margin erosion appears from absorbed tariff costs or if management revises guidance downward