Recent market performance suggests a reassessment of conventional technology sector allocations may be warranted. While the Nasdaq-100 has exhibited limited outperformance relative to the S&P 500 over the past year, investor attention is increasingly focused on the capital intensity of artificial intelligence development and the potential for disruptive impacts on established software business models. The iShares Extended Tech-Software ETF’s recent decline – approaching 19% – underscores this growing apprehension.
Against this backdrop, a divergence in valuation and performance is becoming apparent. Walmart (WMT 0.80%) shares have demonstrated a robust upward trajectory, exceeding the returns of the Nasdaq-100 by a considerable margin and outpacing established technology firms such as Meta Platforms, Microsoft, and Amazon. This relative strength merits investigation.
The question arises: is Walmart, in effect, a technology play disguised as a retailer? A preliminary assessment suggests that the company’s strategic deployment of artificial intelligence may position it to capture a portion of the value creation associated with this technology.
Walmart’s Pragmatic AI Integration
The current market enthusiasm for artificial intelligence may not translate into uniform returns across the sector. It is plausible that the primary beneficiaries of this technology will be those companies that successfully integrate AI into their existing business models, rather than solely focusing on AI development as an end in itself. Walmart appears to be pursuing this latter, arguably more sustainable, approach.
Recent partnerships with OpenAI and Alphabet’s Google Gemini signal a commitment to leveraging AI to enhance the shopping experience. The initial results of these collaborations, while still preliminary, are encouraging.
“Sparky”: An Early Indicator of Monetization Potential
Management commentary during the company’s recent earnings call indicated that “Sparky,” Walmart’s agentic AI shopping assistant, is already demonstrating a positive impact on sales. Customers engaging with Sparky exhibit an average order volume approximately 35% higher than those who do not utilize the tool. This suggests a potential for increased revenue per customer.
The significance of such tools lies in their ability to enhance customer understanding and streamline the purchase process. By facilitating a more efficient and personalized shopping experience, Walmart aims to improve customer loyalty and drive sales growth. Dave Gagina, Executive Vice President for Walmart U.S., characterized Sparky as a transition from traditional search to intent-driven commerce, enabling customers to make purchasing decisions with greater confidence. While still in its early stages, Sparky’s adoption rate – currently encompassing approximately half of Walmart app users – suggests considerable room for expansion.
It is important to acknowledge that Walmart’s valuation reflects this perceived potential. A price-to-earnings ratio of 45 is currently higher than that of the Nasdaq-100 (32.7). As a capital-intensive retail business, Walmart’s growth trajectory is unlikely to match that of a high-growth, capital-light technology firm. However, if the premise that AI-driven value creation will be distributed across a broader range of companies proves correct, Walmart may be well-positioned to benefit.
In conclusion, while not without risk, Walmart’s strategic deployment of AI represents a pragmatic approach to monetization. For patient investors, the stock may offer a compelling opportunity to participate in the potential upside associated with this transformative technology.
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2026-02-26 16:52