Here’s why BofA says Walmart is positioned to be a leader in AI commerce

Investing.com - Walmart is positioned to become a leader in artificial intelligence-enhanced commerce, analysts at BofA said in a note to clients raising their price target for the big-box retail giant.

The strategists led by Robert Ohmes highlighted that Walmart’s AI agent, dubbed "Sparky," is "testing well and will soon develop" the ability to take actions on behalf of customers rather than just answering questions.

"While the development of the market is still in very early stages, we see Walmart as well-positioned to be a leader in ’top of funnel’ agentic AI commerce," they wrote, citing the large scale of the company’s operations and its ability to serve customers both on and offline.

Walmart also has "unmatched" access to data, including higher-frequency grocery figures, from 180 million shoppers, the analysts said. There is a "high potential" that Walmart could notch partnerships with "leading" makers of large-language models, they added.

The comments come after Walmart’s most recent results showed signs of resilience among its customers despite broader economic headwinds, with fiscal second-quarter revenue of $177.4 billion topping Wall Street estimates.

Still, profit for the period fell short of projections -- the first earnings miss by Walmart in more than three years. The company flagged that some middle- and low-income shoppers are reining in expenditures due to tariff-fueled price hikes, although it noted that its price increases have been lower than the national average.

The BofA analysts noted that while roughly two-thirds of what Walmart sells is produced domestically, import tariffs on the remaining one-third are running at about a 20.3% blended average rate for the firm.

"Walmart does see potential for greater price competition and a noisier 6-9 months until U.S. retailers fully lap price increases," they wrote. However, mid-single-digit percentage upticks in new customers and the addition of a new branded credit card to Walmart’s membership service are tipped to support the business.

"Younger cohorts" are embracing private label options as well, especially among groceries, they said.

Against this backdrop, the analysts raised their price objective for Walmart’s shares to $125 from $120, citing "increased confidence" on the firm’s top and bottom line performance. The stock has risen by more than 14% so far this year.