Scroll through Walmart’s app, and you’ll pass a small gray label: “Sponsored.” Someone paid for that spot, and it seems too small to matter.
It moves more than almost anything else the company sells.
Goldman Sachs wrote in a Sept. 9 research note shared with TheStreet that the ad placement next to your Walmart (WMT) grocery list now carries better margins than the groceries themselves.
Walmart Connect, the retailer’s advertising arm, is about six years old. Ryan Mayward, the unit’s general manager, told investors at Goldman Sachs’ Communacopia + Technology conference this month that its margins run above 70%.
He said Walmart’s core retail business runs closer to 5%, according to MarketBeat.
Ads carry margins groceries can’t touch
That gap explains why Goldman Sachs is paying attention. The bank’s analysts wrote that Walmart Connect has grown more than 40% year over year in each of the past several quarters, pushing operating income up faster than sales.
The growth isn’t only coming from big brands. Goldman Sachs described a symbiotic loop: as more independent sellers join Walmart’s online marketplace, they compete for visibility by buying sponsored search placements, which funds even more of the ad business’s expansion.
Related: Target is taking on Walmart with a major grocery move
Public earnings data backs up the trend. Walmart Connect’s U.S. business grew 41% in the fiscal fourth quarter, excluding VIZIO, according to CNBC. Companywide, global advertising revenue reached $6.4 billion for the year, up 46%, according to Marketing Dive.
For a retailer known for thin margins, that kind of profit engine changes the math. Every ad dollar earned effectively helps fund the next price cut or delivery upgrade, the Goldman Sachs note said.
VIZIO and Vibe.co built a TV ad arm
Walmart didn’t build that engine by accident. It bought VIZIO for roughly $2.3 billion in a deal that closed in December 2024, according to a press release. That deal gave Walmart a connected-TV platform, putting its shopper data behind ads that run on millions of televisions.
The payoff is showing up now. VIZIO’s operating system became the top-selling smart TV platform in the U.S. during the first half of 2026, the Goldman Sachs note said. Walmart is now pushing that software into its private-label Onn TVs to further expand its reach.
In August, Walmart completed its purchase of Vibe.co, a self-service streaming ad platform, for a price The Wall Street Journal put at roughly $1.4 billion, TechCrunch reported.
The Vibe.co deal opens connected-TV advertising to small businesses that have never bought a TV ad before, giving Walmart Connect a new base of advertisers.
Walmart has also struck ad-buying partnerships with Magnite, Yahoo’s DSP, and Google’s YouTube. Agencies can now target Walmart shoppers on those platforms without switching tools, the note said.
Sparky nudges Walmart shoppers toward sponsored picks
Walmart is also testing ads inside Sparky, its AI shopping assistant. Roughly half of Walmart’s app users have tried Sparky, and those who use it spend about 35% more per order than those who don’t, according to Fortune.
That means the tool answering “what should I buy for taco night” may increasingly be shaped by who paid to be recommended. Walmart says it wants to keep ad density low enough that shoppers don’t notice, but the incentive will only grow as the unit’s margins keep beating everything else the company sells.
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Walmart’s scale also helps as shopping shifts toward AI agents outside its own app.
Third-party bots from partners like Google and OpenAI often default to whichever retailer offers the lowest price and fastest delivery, criteria Walmart usually wins, according to the Goldman Sachs note.
Walmart said it shares only real-time pricing and availability data with those partners, keeping long-term customer data to itself.
WMT dipped Tuesday as Wall Street stayed bullish
None of this stopped Walmart shares from sliding. WMT closed Tuesday at $108.09, down roughly 1% from the prior session.
Wall Street isn’t worried. Morgan Stanley’s most recent note carries an overweight rating and a $140 price target, built around what it calls the company’s “flywheel” of e-commerce, membership and advertising. Goldman Sachs rates the stock a buy with a $132 target.
The broader Street agrees. Across 43 analysts tracked by S&P Global Market Intelligence, Walmart carries a consensus Buy rating and an average target of $127.43, about 18% above the current price.
Forecasts still range from $81 to $155, a spread that shows how unsettled the payoff from Walmart’s ad bet remains.
Related: How Walmart is quietly winning the battle for shoppers
A tech company wearing a retailer’s name tag
Walmart’s advertising surge fits a bigger shift already reshaping the industry. Amazon edged past Walmart in total U.S. revenue this year for the first time in more than a decade, Fortune reported, a changeover that had less to do with store count than with which company moved faster to turn its platform into a media business.
Target, Costco and Kroger are all racing to build similar ad networks off their own shopper data, chasing the same high-margin math Walmart just showed off in San Francisco.
Walmart’s own growth rate shifted from 53% to 37% between the third and fourth quarters, which its finance chief called simple math on a bigger base.
The question now is whether Walmart can keep monetizing attention as fast as it monetizes shelves, without shoppers ever noticing the trade.
More on Walmart & its stock:
- History of Walmart: Company timeline & facts
- Is Walmart a good long-term investment? Its buy-and-hold prospects explained
- Does Walmart pay dividends? Its yield and payouts explained
- Walmart’s stock buybacks: How its repurchase program affects shareholder returns
- How many employees does Walmart have in 2026? Its workforce, locations & layoffs explained
- Where is Walmart’s headquarters? All about its Bentonville, Arkansas base
