Why Walmart Stock Could Rally Despite Tariffs and Inflation Headwinds

Walmart Inc. (WMT) delivered strong Q1 FY2026 results, confirming its position as a resilient retail giant. The growth in revenue, profits, and margins underscores solid execution. The company has seen strength across US comparable sales, global e-commerce, and advertising. Despite global headwinds and tariff concerns, Walmart continues to show financial flexibility and strategic focus. This article explores Walmart’s financial performance, technical outlook, tariff impact, competitive standing, and investment case in the current economic conditions.

Walmart Q1 FY2026 Earnings Show Strong Revenue and Profit Growth

Walmart reported solid financial results for Q1 FY2026. The quarterly revenue reached $165.61 billion. The chart below shows a consistent increase in revenue over the past years. The yearly revenue for 2025 was $680.99 billion. The US comparable sales increased 4.5%, with strength in health, wellness, and grocery. On the other hand, the global eCommerce surged 22%, driven by store-fulfilled pickup and delivery. Walmart’s advertising business grew 50%, with US advertising up 31%.

Moreover, the chart below shows stable net income and operating income over the past three years. Operating income for Q1 FY2026 increased by $0.3 billion to $7.135 billion. However, net income stood at $4.487 billion.

The gross profit margin improved to 24.94%. Membership income grew 14.8%, helping boost other income by 3.7%. The chart below shows that Walmart’s return on equity is at a strong 20.37% and return on invested capital has improved to 14.52% in 2025. These rising profitability and efficiency metrics signal robust financial health, supporting further upside potential in Walmart’s stock price.

The company generated $5.411 billion in operating cash flow, up $1.2 billion from last year. Moreover, the free cash flow was $425 million. The drop in free cash flow highlights high capital expenditures and investments.

Walmart ended the quarter with $9.3 billion in cash and $52.9 billion in total debt. Inventory stood at $57.5 billion, up $2.1 billion or 3.8%. These results highlight strong execution and financial flexibility.

Walmart’s Q2 FY2026 Sales Forecast and Growth Outlook

Walmart expects net sales to grow between 3.5% and 4.5% in Q1 FY2026. This guidance is based on Q2 FY2025 net sales of $167.8 billion. The company includes a 20-basis-point boost from its recent VIZIO acquisition.

The company is facing challenges such as global economic shifts, interest rates, and consumer behaviour. Despite these factors, Walmart remains confident in navigating short-term headwinds. Leadership believes that strong execution and strategic investments will support growth.

Walmart Stock Technical Analysis: Patterns Signal Next Rally

Walmart has shown strong and explosive price action over the past few decades. The monthly chart below reveals that the stock has consistently trended higher, producing multiple record highs. During the early 2000s recession, Walmart’s stock price consolidated within a tight range. Similar patterns appeared during the 2008 and 2001 recessions.

Historical Consolidations Set the Stage for Breakouts

The COVID-19 recession also marked a key bottom, which sparked a strong upward move in the stock. Interestingly, Walmart’s stock tends to consolidate in either broadening ranges with high volatility before surging to new highs. Between 2020 and 2024, the price consolidated between the $37 and $50 range.

A breakout from this wedge pattern led to a powerful rally, pushing the stock to a record high near $104.76. Following that surge, the stock entered another consolidation phase between the $80 and $100 range, waiting for its next direction.

The recent Trump tariffs have introduced strong volatility in Walmart’s price action. This is likely due to trade-related uncertainty impacting consumer demand and supply chain costs.

Wedge Formations Signal Long-Term Accumulation Phase

To better understand Walmart’s price action, the weekly chart below shows the formation of an ascending broadening wedge that began at the 2015 low of $15.58 and extended to the all-time high. Within this larger pattern, a symmetrical broadening wedge also formed, triggering strong bullish momentum.

The intersection of these two wedge patterns around the $38.43 low in 2022 marked a key inflection point and generated a long-term buy signal. This setup led to a sharp rally, driving Walmart’s stock to a record high of $104.76. The breakout above the ascending broadening wedge confirmed the continuation of the long-term uptrend.

A similar consolidation phase occurred from 2020 to 2024, where prices moved sideways before breaking out. Now, the price is consolidating again between $80 and $104, which suggests a potential accumulation phase.

If Walmart breaks above the $104.76 level, it could trigger the next leg of the rally and push prices to new all-time highs. This setup reflects strong bullish momentum building beneath the surface.

Walmart Price Action Post-Tariffs: Key Levels and Trading Signals

The weekly chart for Walmart shows that the stock has been surging higher since early 2024. The tariffs introduced by Trump created strong uncertainty, causing the stock to bottom at $79.81 in April 2025. However, a strong reversal in April, followed by consolidation between the $94 and $99 range, suggests that Walmart is preparing for its next rally.

A break above $99 would be a bullish signal and could push the stock toward the $105 level. A breakout above $105 would confirm strong upside momentum and may lead to new all-time highs.

On the other hand, a break below $94 would signal weakness and could trigger further downside, pushing the price toward the next major buy zone. Traders should watch for a decisive move outside this range to confirm Walmart’s next trend direction.

To better understand Walmart’s short-term price action, the daily chart below shows the formation of a bottom in April 2025. The reversal from this level has created a rounding bottom pattern, suggesting that the stock is building positive momentum.

How Trump’s Tariff Policy Impacts Walmart’s Margins and Strategy

Walmart remains a strong long-term investment option. The company operates over 10,750 stores across 19 countries and holds a market cap of nearly $786 billion. It competes effectively with major retailers like Costco and Target. Its consistent dividend history, including over 50 years of increases, shows strong execution and financial discipline. This track record signals that Walmart can perform well in both strong and weak economic cycles.

Walmart’s core strength lies in its resilience. It benefits from steady demand for essentials and gains new customers during downturns as shoppers trade down. Its Q1 FY2026 results show 2.5% revenue growth and 4.5% US same-store sales growth. While its dividend yield is low at 0.9%, the business is stable and still expanding. Investors seeking safety and moderate growth may find Walmart an ideal pick, even if the stock trades at a premium.

Trump’s tariff policy may raise Walmart’s import costs. Many of Walmart’s goods come from China and other countries. Higher tariffs will likely increase the cost of these imports. Walmart may try to pass some of these costs to customers. However, price-sensitive shoppers may push back, which could pressure sales. Still, Walmart has strong supply chain leverage and global sourcing strategies.

It can shift suppliers or negotiate better terms to soften the blow. Its size gives it more flexibility than smaller retailers. While tariffs may weigh on margins in the short term, Walmart’s scale, logistics, and cost control should help it adapt. If managed well, the company can absorb shocks and maintain its long-term growth. The stock may show short-term volatility, but long-term investors may find opportunity in the dip.

Walmart vs. Competitors: Market Position, Performance, and Valuation

Walmart has delivered a strong 309.4% price return since 2016, outperforming traditional competitors like Q1 FY2026 (81.1%) and Q1 FY2026 (24.1%), but lagging behind Q1 FY2026 (702.8%) and Q1 FY2026 (554.6%).

While it may not match Amazon’s tech-driven growth or Costco’s explosive membership model, Walmart offers a stable, diversified retail base with a growing e-commerce arm and consistent performance through economic cycles.

Its leadership in low-cost essentials and strong global footprint give it defensive strength. For investors seeking a balanced retail stock with reliable returns and resilience, Walmart offers a solid edge in uncertain macro environments.

The chart below shows Walmart’s current P/E ratio at 42.09, which is higher than Amazon’s (32.74), Target’s (10.96), and Kroger’s (19.44), but lower than Costco’s (54.03). This suggests Walmart is priced at a premium relative to most of its traditional competitors. This premium reflects strong investor confidence in its stability and growth prospects.

While not the cheapest option, Walmart’s valuation signals that investors are willing to pay more for its consistent performance, resilient business model, and expanding digital presence. For long-term investors, this premium could be justified by Walmart’s continued execution and ability to adapt in a changing retail environment.

Market Risks for Walmart: Tariffs, Inflation, and Consumer Trends

Walmart faces several market risks despite its strong financial standing. The biggest concern comes from shifting macroeconomic conditions. The uncertainty about future interest rates, inflation, and changing consumer behaviour may pressure household budgets.

These factors could impact discretionary spending at low-cost retailers like Walmart. Additionally, geopolitical tensions and supply chain disruptions increase the challenges. The higher inventory levels and rising debt also create financial stress if growth slows. Since Walmart has delivered steady performance, these headwinds could limit near-term upside.

Another key risk is the impact of Trump’s newly proposed tariffs. Since Walmart imports a large portion of goods from China, these tariffs could significantly raise costs.

From a technical perspective, the stock price has been rising consistently for multiple decades. The price volatility in 2025 following the Trump tariffs has increased the risk of a deeper consolidation before reaching new highs. However, a break above $105 would negate this risk and signal further upside.

Walmart’s Long-Term Investment Case Amid Market Volatility

Walmart remains a compelling long-term investment despite near-term headwinds. The company continues to deliver strong revenue growth, rising profitability, and expanding e-commerce and advertising segments. Its ability to navigate economic cycles, maintain customer loyalty, and execute strategic investments sets it apart.

Technically, the stock is consolidating with bullish potential. A breakout above $105 could trigger the next rally. Investors may consider buying the stock on any correction and holding it for long-term growth. Any decline in stock price due to tariff headwinds or geopolitical tensions could be viewed as a buying opportunity for long-term positions. The key support remains near the $80 level, while $105 serves as the pivotal breakout point for further upside.