Agents and e-commerce - the bright spots for Walmart in a solid Q2

Having arrived at e-commerce profitability last quarter, Walmart continues its success in this respect with its latest quarterly numbers indicating a 25% year-on-year growth rate. Elsewhere the firm’s Q2 numbers were solid rather than spectacular - total revenue was up 4.8 percent from a year ago to $177.4 billion, but profit disappointed Wall Street.

For his part, CEO Doug McMillon told the post-results announcement analyst call:

It's great to have top line momentum, and we want to keep that going, keep the share gains growing. We've got good growth in e-commerce at 25%, we have a lot of headroom. Like, our share in e-commerce is still relatively low, so there's a long runway there. 

AI of course

McMillon also returned to the increasingly familiar theme of Walmart’s use of AI:

For a few quarters now, I've been commenting on our use of Artificial Intelligence. Our enthusiasm for how AI can help us serve customers and members better improve the experience for our associates and increased productivity continues to grow. It's been years since we made a structural change for a role reporting to the CEO, and we've done it in this case because we're clear on a path to accelerate.

Daniel Denkers joined us to lead AI acceleration, product management, design, tech prioritization and AI-related change management. Daniel brings tremendous expertise and experience from places like Instacart and Uber. We also announced a new role reporting to Suresh Kumar, our Chief Technology Officer, that will focus on AI platforms. This role will help us increase innovation, speed and productivity, own the AI platforms and architect our intelligent system stack.

He added:

When I think about AI, one of the things that we've obviously got is a ton of data and it's not just product catalog data these days, it's delivery data. It's real-time data. And the way that we can put that to work to understand the context in which someone's shopping is really exciting to think about. I think it's compelling. There are times when you want to replenish your home with the things you buy all the time. There are other times when you're browsing for fun, and I think we're going to do a better job of understanding what the moment calls for and being able to meet the need, whether it's delivery speed or it's the breadth of the assortment.

One of the interesting things about our advantages is the physical nature of them. If we can compete as it relates to the digital aspects, but we bring customer service culture, a lot of great associates that bring that culture to life, the physical supply chain, being able to fulfill the order across the breadth of our assortment that's online is something that not very many people can do. So it's one thing to know what intent is. It's another to be able to close it out. And I think we're in a position to be able to do both of those things. And this omni nature of our business proves to be an advantage once again.

Agents assigned

Agentic AI is a particular area of focus now. McMillon explained:

We're building agents into the core of how we operate, including four super agents. There will be many agents that roll up to these super agents that our customers, associates and other stakeholders experience.

First is Sparky. Sparky is the customer-facing assistant you see smiling at the bottom of our app. Today, Sparky takes us from traditional search to intelligent AI-powered assistance. Sparky will develop Agentic capabilities over time. Customers are giving us positive feedback, and we're excited about the road map ahead. As we improve and scale Sparky, we'll make it even smarter and more personalized. It will be the primary digital vehicle for discovery, shopping and for managing everything from reorders to returns. We see Sparky becoming an indispensable part of how people shop with us.

The other super agents we're building include one for associates that will bring everything into one place from scheduling to sales data, one for our suppliers, sellers and advertisers that they will use to manage things like onboarding orders and campaigns. And lastly, a developer agent built to scale innovation across the business by speeding up how we test, build and launch new products. This is just the beginning of how we'll deploy AI over time. We see lots of opportunities, whether that's with digital twins of our facilities, which can help predict or prevent issues before they happen or the accuracy of dynamic delivery windows, which will provide to 95% of U.S. households by the end of this year.

Overall, he concluded, AI will drive future growth. But not yet:

I don't think it's lifting our top line sales yet. I think this is very early days. But I am excited about the road map.

My take

Better than Target, but by Walmart former standards, not a quarter to blow anyone’s expectations away.