2 Catalysts That Can Drive Walmart Stock Higher in 2026

Walmart (NYSE: WMT) shares are up by 25% so far this year, putting them ahead of the S&P 500 during that time. Some investors wrote off Walmart just a few years ago, thinking Amazon (NASDAQ: AMZN) was the better stock. Even Warren Buffett dumped his Walmart stock back in 2018, but that ended up being the wrong call.

Walmart has two major catalysts riding into 2026 that can determine if the rally continues.

Image source: Getty Images.

Online ads can enhance profit margins

Online ads don't make up a large part of Walmart's business, but the segment is growing quickly and can do wonders for Walmart's profit margins. The retail industry is known for its low single-digit margins, whereas online ads tend to have higher profit margins.

Walmart's global ad business grew by 53% year over year in its fiscal third quarter of 2026. If the retailer's ad sales continue to grow at that rate for a few more years, it can make a meaningful impact on overall revenue growth, not just profits.

Online ads are a contributing factor to Walmart's 34% year-over-year net income growth, despite a 6% year-over-year increase in revenue.

Walmart runs these ads on its website just like Amazon. However, the retailer also displays ads in each of its stores through TV walls and self-checkout screens. Each store becomes an advertising channel, and the heavy traffic these stores experience presents a compelling, long-term opportunity to boost margins.

E-commerce sales remain strong

E-commerce sales are another major catalyst, especially after Walmart demonstrated that it can compete with Amazon for online purchases. Each Walmart store serves as a logistics hub, enabling the company to deliver products nationwide while minimizing shipping costs.

Walmart's logistical setup helped power 27% year-over-year e-commerce growth in Q3 FY26.

"E-commerce was a bright spot again this quarter. We're gaining market share, improving delivery speed, and managing inventory well," Walmart President and CEO Doug McMillon said in the Q3 FY26 press release.

Higher e-commerce growth also translates into more ad revenue. Amazon's ad growth regularly outpaces its e-commerce sales growth, and a similar trend has been observed at Walmart.

Investors should monitor consumer spending

E-commerce and advertising are two key catalysts for Walmart. However, the business heavily depends on consumer spending remaining resilient to rally. If consumers reduce their purchases, Walmart's revenue may decrease.

Even if consumers pull back, they still have to consume. Walmart specializes in low prices for a wide range of goods, which makes the retailer a top choice during an economic slowdown. Walmart has also proven in recent years that it can grow during bullish economic cycles.

News from Adobe Analytics arrived at just the right time for investors to feel confident about consumer spending. The analytics team found that overall Cyber Monday sales increased by 7.7% year over year. This finding suggests that people are still spending more money, which could position Walmart for a strong 2026.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, and Walmart. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.