Walmart's e-commerce flywheel expands its addressable market; Morgan Stanley maintains Overweight and a $140 target price

Overview

This report is Morgan Stanley's company research on Walmart Inc, based on discussions with Walmart executives in Bentonville, AR. The core view is that WMT's U.S. e-commerce flywheel is expanding its addressable market through 3P Marketplace, retail media, membership, Vizio, and Sparky, and has the potential to be replicated in international markets.

Core views

Morgan Stanley believes Walmart's growth story is no longer just about traditional offline retail, but a flywheel jointly driven by e-commerce, supply chain, advertising, and membership. Higher contributions from 3P Marketplace and general merchandise can improve advertising monetization; Vizio expands into non-CPG advertising budget pools; international market deployment can reuse the U.S. technology stack; and Sparky may enhance user engagement in discovery, recommendation, and whole-basket shopping scenarios.

Analysis framework

Starting from management discussions, the report evaluates WMT's long-term growth potential and target price by combining category mix, the relationship between advertising revenue and GMV, replicability of the e-commerce technology stack, agent-based shopping interactions, and valuation multiples such as P/E and EV/EBITDA.

Methodology notes

• Valuation methodsblended P/E and EV/EBITDA

  Blended valuation based on F'28e EPS and F'28e EBITDA

  The target price corresponds to a blended P/E multiple of about 44.2x on F'28e EPS of $3.16, and an EV/EBITDA multiple of about 22x on F'28e EBITDA of about $52.8b.

• Financial modelMorgan Stanley ModelWare

  Model metric convention

  The report tables state that unless otherwise noted, metrics are based on the Morgan Stanley ModelWare framework, where e represents Morgan Stanley Research estimates and a represents company-reported actual data.

• Rating systemMorgan Stanley relative rating system

  Relative rating and time horizon

  Overweight means the stock's total return over the next 12-18 months is expected to exceed the average total return of the analyst's industry coverage on a risk-adjusted basis; Morgan Stanley does not directly use Buy, Hold, or Sell as formal stock ratings.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Walmart Inc (WMT.O)

  Primary target

  Strengths

  3P Marketplace, retail media, membership, e-commerce, and supply chain automation together form a growth flywheel, while grocery's high-frequency traffic helps deepen customer reach.

  Weaknesses

  A high grocery mix keeps the overall advertising revenue-to-GMV ratio below that of platforms more weighted toward general merchandise, and the e-commerce business may still face loss pressure.

  Comparison

  The report believes WMT has transformed from an offline retailer once pressured by AMZN into an e-commerce and supply chain disruptor, and can therefore command valuation multiples above its historical average.

  Risks

  Renewed expansion of e-commerce losses, U.S. e-commerce growth slowing to <15%, Flipkart losses exceeding expectations, and advertising monetization falling short of expectations.

• Vizio

  Expander of advertising addressable market

  Strengths

  Helps Walmart extend its advertising capabilities into budget pools that core e-commerce platforms struggle to cover, such as streaming, automotive, telecommunications services, and localized advertising.

  Weaknesses

  Needs to prove integration efficiency with Walmart's data, ad sales, and merchant ecosystem.

  Comparison

  Compared with Walmart's core eCommerce platform, which mainly serves physical goods, Vizio is more oriented toward digital content and service advertising scenarios.

  Risks

  Slow integration progress, insufficient advertiser adoption, or non-CPG advertising yields below expectations.

• Walmart Connect / Retail Media

  Growth monetization engine

  Strengths

  3P GMV, general merchandise, and high-frequency shopping data can improve advertising attachment rates and expand the retail media revenue base.

  Weaknesses

  Low grocery margins and low advertising monetization rates suppress the overall advertising revenue-to-GMV ratio.

  Comparison

  General merchandise, home, apparel, sporting goods, and electronics typically have higher advertising revenue-to-GMV ratios than grocery.

  Risks

  Insufficient improvement in category mix, slow 3P penetration growth, or inadequate conversion of advertising budgets.

• Flipkart

  International e-commerce risk exposure

  Strengths

  Provides a platform asset and growth option for Walmart's international e-commerce strategy.

  Weaknesses

  The report lists higher-than-expected Flipkart losses as a downside risk.

  Comparison

  Compared with replication of the U.S. e-commerce flywheel's technology stack, Flipkart more directly reflects execution and profitability pressure in international markets.

  Risks

  Widening losses, intensifying competition, or returns on international investment below expectations.

Key data

• Report date2026-06-08The cover shows June 8, 2026 12:24 AM GMT.
• Stock ratingOverweightThe cover summary states OW.
• Target price$140The cover summary states $140 PT, and the target price history shows 140 on 2026-04-21.
• Valuation multiples~44.2x P/E; ~22x EV/EBITDABased on F'28e EPS of $3.16 and F'28e EBITDA of ~$52.8b.
• Historical valuation comparison44.2x P/E vs 10-year average 21xThe report believes the higher multiple is supported by Walmart's transformation from a traditional retailer to an e-commerce and supply chain disruptor.
• 3P Marketplace and advertisingPositive correlationThe report states that 3P GMV growth is positively correlated with Walmart Connect revenue.
• Upside scenario indicatorU.S. e-commerce growth 40%+The report lists sustainable 40%+ U.S. e-commerce growth driven by retail media, membership, 1P/3P, and automation as an upside factor.
• Downside thresholdU.S. e-commerce growth <15%; comp sales <2%The report lists this scenario as a downside risk.

Impact & implications

If Morgan Stanley's view plays out, Walmart's investment narrative could shift further from low-margin grocery retail toward high-frequency traffic, advertising monetization, membership, and an international e-commerce platform, and its valuation center may continue to remain above its long-term historical average. Investors should focus on whether 3P GMV, advertising revenue, Vizio integration, and overseas replication of the U.S. technology stack can generate sustainable incremental growth.

Risks

• E-commerce losses rise again after a brief easing.
• U.S. e-commerce growth slows to <15%, while comp sales fall below 2%.
• Flipkart losses come in above expectations.
• A high grocery mix may continue to depress the overall advertising revenue-to-GMV ratio.
• Over-targeting by Sparky may narrow the scope of new product discovery too much, weakening the user exploration experience.
• Morgan Stanley discloses investment banking relationships, service relationships, and potential conflicts of interest with Walmart Inc; investors should use this research as only one input in decision-making.

What to watch

• Growth in 3P Marketplace GMV and its pull-through effect on Walmart Connect revenue.
• Changes in the mix of high advertising-monetization categories such as general merchandise, home, apparel, sporting goods, and electronics.
• Advertiser expansion and yield performance for Vizio in streaming, automotive, telecommunications, and localized advertising.
• Deployment progress of Walmart U.S.'s e-commerce flywheel in international markets such as Mexico and Canada.
• Execution results as Sparky evolves from single-item search toward whole-basket tasks, cross-category journey recommendations, and personalization based on purchase history.
• Changes in U.S. e-commerce growth, comp sales, e-commerce losses, and Flipkart losses.