Walmart hits $1 trillion market value, joins club dominated by Big Tech giants

Adds background in paragraphs 2 to 6, details on AI investment in paragraphs 11 and 12, graphic

By Savyata Mishra and Johann M Cherian

Feb 3 (Reuters) - Walmart WMT.O became the first retailer ever to hit $1 trillion in market valuation on Tuesday, riding on a year-long rally that has seen its shares rise nearly 26%, placing it among the ranks of Big Tech heavyweights such as Nvidia and Alphabet.

Walmart's ascent has been notable as it has managed to tap into a mix of appealing simultaneously to higher-income customers seeking value and convenience and retaining its core base of lower-income shoppers. The stock has surged 468% over the past decade, outpacing the S&P 500's 264% gain, in part due to that dual strategy, which competitors have struggled to replicate.

In just the past five years, the retailer has expanded its online marketplace to over half a billion items, launched one-hour delivery, created Walmart+ to rival Amazon Prime, and built a $4+ billion advertising business that boosted margins.

Critically, Walmart bet early and aggressively on AI, pouring billions into supply-chain automation to stock fresher produce, speed up deliveries and improve inventory forecasting and search, giving the Bentonville, Arkansas-based retailer an operational edge that has helped it beat U.S. same-store sales estimates for 15 consecutive quarters, based on estimates compiled by LSEG.

Investor optimism around these AI investments has further fueled the stock's rise as consumers increasingly shift grocery shopping online.

"They've gone from just being the local retailer for good prices to really embracing technology. It's been a massive digital business transformation that this company has gone through over the last five years," said Eric Clark, chief investment officer at Accuvest Global Advisors.

John Furner stepped into the role of Walmart's global CEO this week as the retailer looks to double down on tech investments amid looming competition from Amazon and Aldi as well as Target TGT.N, which is looking to reverse a sales slump.

U.S. households, particularly low- and middle-income earners, have been under mounting financial strain for some time due to persistent inflation and a cooling job market. Tariffs and uncertainty surrounding the recent U.S. government shutdown have also weighed on spending.

The company was added to the tech-focused Nasdaq-100 Index .NDX last month, home to the most valuable non-financial companies, replacing British drugmaker AstraZeneca AZN.L.

Walmart joins a roster of U.S. companies valued at $1 trillion or more, including Nvidia NVDA.O at $4.5 trillion, Alphabet GOOGL.O at $4.1 trillion, Apple AAPL.O at $3.9 trillion, Microsoft MSFT.O at $3.1 trillion, Amazon AMZN.O at $2.6 trillion, Meta META.O at $1.8 trillion, Broadcom AVGO.O at $1.6 trillion, Tesla TSLA.O at $1.6 trillion, and Berkshire Hathaway BRKa.N at $1 trillion.

AI ARMS RACE

The chain has struck partnerships with OpenAI and Google to embed its online shopping tools directly into their search chatbots, bolstering its push to use AI to streamline everything from product discovery to checkout.

These growing investments in AI are also aimed at closing the gap with online behemoth Amazon, which had a head start with its chatbot, Rufus, a GenAI-powered assistant that answers shopping queries.

Walmart is emerging as "the new AI giant" thanks to how effectively it is weaving the technology into its operations, from cutting the cost of goods to capturing a larger share of consumer spending, according to Brian Mulberry, senior client portfolio manager at Zacks Investment Management.

(Reporting by Johann M Cherian and Savyata Mishra in Bengaluru and Siddharth Cavale in New York; Editing by Arun Koyyur, Anil D'Silva and Pooja Desai)

((johann.mcherian@thomsonreuters.com;))