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Walmart's No. 2 Ranking Hides a Digital Transformation Story
Author: Chris Markoch. Article Published: 6/9/2026.
Key Points
- Walmart Connect is becoming a major profit driver, with advertising revenue growing far faster than the company's core retail business.
- Walmart's physical store network provides a competitive advantage for fulfillment, curbside pickup, and same-day delivery that supports its digital growth.
- Sam's Club demonstrates the power of Walmart's digital strategy, with rising digital engagement leading to stronger membership growth and customer retention.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
In February 2026, Amazon.com Inc. (NASDAQ: AMZN) supplanted Walmart Inc. (NASDAQ: WMT) as the world’s largest company by revenue. That wasn’t a surprise to industry observers, and Fortune reinforced the result by placing Amazon at the top of its Fortune 500 list.
The news isn’t having much impact on either stock’s price. As of June 8, both stocks were up a little more than 6% for the year.
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See the SpaceX play no one is talking about before June 9thBut over a longer horizon, it’s Walmart that has rewarded shareholders with a larger total return.
That’s a trend likely to continue for a reason that may surprise some investors. The death of physical retail has been greatly exaggerated, and it’s an arena where Amazon simply doesn’t compete with Walmart.
Yet even that edge doesn’t fully capture the real story: Walmart may be a stronger proxy for technology stocks than Amazon is a proxy for retail stocks. If that’s right, Walmart doesn’t just merit a premium valuation—it may need to be rerated entirely.
Walmart’s Physical Moat Is a Digital Advantage
Amazon essentially created the category of e-commerce, so it makes sense that the company has an almost impenetrable lead among online shoppers. But Walmart has made strides in closing that gap, and in doing so, it’s shown why its business model has advantages of its own.
First, the company’s retail footprint of more than 4,600 stores doubles as fulfillment nodes without the added expense of building new facilities. This enables curbside pickup, which has become a habit-forming tool for shoppers. Plus, the company can use those stores for same-day delivery, which Amazon can’t match on unit economics.
Walmart Connect (Advertising) Is the Margin Story
The most underappreciated line item in Walmart's financials may be Walmart Connect, the company's U.S. retail media platform. In fiscal year 2026 (FY2026), Walmart Connect generated $6.4 billion in global ad revenue, a 46% YOY increase. In the most recent quarter, Walmart Connect grew 44% domestically, a rate that dwarfs the company's low-single-digit top-line growth.
This has a significant impact on the bottom line. CFO John David Rainey has noted that advertising and membership income now account for roughly one-third of Walmart's operating profit. High-margin ad dollars are effectively subsidizing the lower-margin retail operation, a dynamic Wall Street recognized years ago when it rerated Amazon's multiple upward on the strength of its ad segment.
Even more noteworthy, Walmart is still in the early innings. Its advertising revenue represents roughly 1% of gross merchandise value, compared with approximately 8% for Amazon. That gap gives the company, and WMT, a long runway—and investors who wait for Walmart's ad business to mature before repricing the stock may find themselves late to the trade.
Sam's Club as the Proof of Concept
If you want to see where the Walmart flagship is heading, look at Sam's Club. The $90 billion warehouse division has become the clearest demonstration that digital engagement and physical retail aren't in conflict.
Membership income posted double-digit growth for five consecutive quarters through Q4 2025, with digital penetration hitting an all-time high. Scan & Go adoption—the app-based checkout feature that lets members skip the register entirely—surged 500 basis points in a single quarter, and roughly 40% of Sam's transactions are now digital.
The Grapevine, Texas, prototype club runs at 100% Scan & Go participation. Members who shop digitally visit three times more often, buy across twice as many categories, and renew their memberships at meaningfully higher rates.
Sam's Club has announced plans to remodel all 600 of its existing locations while opening approximately 15 new clubs per year, with a stated goal of doubling membership over the next decade.
The Chart Points to an Inflection Point
WMT dropped approximately 7% on the day of its Q1 earnings report for FY2027. The report showed a solid double beat with high single-digit year-over-year (YOY) gains. The point of contention was the guidance, as it was with many retailers.
Specifically, Walmart is facing the uncertainty of higher tariff-related costs and what that could mean for its core customer. That said, the sell-off found a floor right around the 200-day simple moving average (SMA).
Analysts remain generally bullish on WMT, with a consensus price target of $138.85. That’s about 15% above the price as of this writing. It would also reconfirm the highs the stock made in February and May of this year.
2 Great Stocks—Totally Different Purposes
AMZN has been a wonderful stock for long-term investors, and it will continue to be in the future. However, this is a case of knowing where revenue growth is coming from. For Amazon, that increasingly means Amazon Web Services (AWS), which accounted for $128.7 billion in revenue in 2025.
Amazon still delivered $588.2 billion from its retail-related sales, but that number is well below Walmart, which comes from its blend of physical locations and growing digital efforts.
The reliance on retail is a reason that Walmart pays a dividend and Amazon does not. But even though that dividend is modest, it’s a safe payout that has increased for 53 consecutive years. And this year will make 54. After its stock split in January 2024, WMT is attractively priced for investors to start accumulating and letting the impact of compounding work to their advantage.
Applied Digital Is Building a $36 Billion AI Real Estate Empire
Submitted by Jeffrey Neal Johnson. Posted: 6/12/2026.
Key Points
- Applied Digital finalized a 15-year, 210-megawatt lease at Delta Forge 2, locking in approximately $36 billion in total contracted base-term lease revenue.
- A $1.59 billion senior secured notes offering will fund construction of a new 150-megawatt building and retire a high-interest Goldman Sachs bridge loan.
- Analysts at Northland Capital Markets project execution risk will decline between 2026 and 2027, with a consensus price target of $67.67 representing over 70% upside.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
Applied Digital (NASDAQ: APLD) recently finalized a 15-year, 210-megawatt lease at its Delta Forge 2 campus, signaling a definitive transition from a high-beta crypto miner to a tier-one digital infrastructure landlord.
While retail investors temporarily dumped shares over macroeconomic inflation jitters and near-term debt mechanics, institutional capital recognizes a business holding approximately $36 billion in total contracted base-term lease revenue, with roughly 70% backed by U.S.-based investment-grade hyperscalers.
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Bloomberg projects the SpaceX IPO could be valued at $1.75 trillion - potentially the biggest IPO ever. But one millionaire trader says the largest gains won't come from buying SpaceX directly.
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See the SpaceX play no one is talking about before June 9thThe artificial intelligence (AI) land grab is accelerating, and hyperscalers require dedicated power and cooling at a scale previously unseen in commercial real estate. By securing a $5.2 billion baseline revenue commitment, expandable to $12.7 billion if all 30-year renewal options are exercised, Applied Digital locks in the long-term cash flow profile required to dominate the next decade of infrastructure deployment.
With an $11.1 billion market capitalization and 139% year-over-year top-line revenue growth, Applied Digital commands a premium valuation based largely on its ability to build high-density campuses faster than legacy data center operators. Operations for Delta Forge 2 are targeted to commence in the first quarter of 2028, effectively setting a hard date for when these multi-billion-dollar contracts begin generating actual yield.
This Isn't Debt, It's Rocket Fuel
Markets often struggle to distinguish between short-term capital expenditure requirements and long-term value creation. Applied Digital recently suffered an intraday decline of 5.7%, sending its share price down to the $39 area.
Retail sentiment quickly soured on the news that subsidiary Applied Digital ComputeCo 3 priced a $1.59 billion offering of 7.000% senior secured notes due 2031. This isolated price action, heavily influenced by a broader tech sector retreat ahead of May consumer price index data, masks the fundamental strength of Applied Digital's underlying asset base.
The $1.59 billion debt issuance is not reckless corporate borrowing to fund operational deficits. Applied Digital specified that the proceeds will be used primarily for constructing a 150-megawatt fourth building, designated ELN-04, at the Polaris Forge 1 campus in North Dakota.
A portion of the proceeds will also be used to retire a high-interest bridge loan previously secured from Goldman Sachs. When you compare these near-term leverage requirements with the massive 1.4-gigawatt contracted critical IT load across the five-campus portfolio, the debt mechanics reflect highly sophisticated capital alignment.
Applied Digital is leveraging predictable, contracted cash flows to bridge immediate development phases. A recently closed revolving credit facility with up to $350 million of committed capacity and an additional $200 million accordion option provides the necessary liquidity runway to maintain construction timelines. The subsequent 9.5% after-hours volume surge illustrates institutional investors stepping in to capitalize on retail misunderstanding of this secured debt structure.
Applied Digital's Waterless Moat Is Its Secret Weapon
Comparing Applied Digital to hardware-centric peers will help investors understand the company's strategic operational pivot. Companies like IREN (NASDAQ: IREN) and CoreWeave (NASDAQ: CRWV) assume more direct hardware depreciation risk by constantly purchasing and leasing the latest generation of graphics processing units.
Applied Digital operates more like an infrastructure landlord. The client supplies the highly volatile compute hardware; Applied Digital supplies the facility, the power, and the cooling. This facility-first real estate model may help protect operating margins from rapid silicon obsolescence. Legacy miners like Core Scientific (NASDAQ: CORZ) are attempting similar pivots, but few possess the capital backing to execute at the gigawatt scale.
The unnamed counterparty at Delta Forge 2 is the same U.S.-based, investment-grade hyperscaler responsible for the two previous major leases across Applied Digital’s portfolio. This level of vendor stickiness is a strong validation of the underlying technology stack.
Delta Forge 2, located in an undisclosed southern state, will exclusively use proprietary waterless cooling technology alongside high-power-density infrastructure. As grid access tightens and nationwide environmental regulations on water use become more stringent, waterless cooling shifts from a luxury feature to a potential competitive advantage for massive training and inference workloads.
Today, 70% of Applied Digital's $36 billion base-term revenue backlog is supported by U.S.-based investment-grade hyperscalers, demonstrating that the market demands exactly what Applied Digital is building.
From High-Beta Bet to Blue-Chip Blueprint
Applied Digital's valuation multiples currently skew toward extreme growth expectations rather than present-day profitability. A price-to-sales ratio of 35 and a trailing 12-month earnings per share loss of 74 cents reflect an organization operating at the absolute peak of its capital expenditure cycle. The current balance sheet debt-to-equity ratio sits at 1.65, a necessary byproduct of scaling multibillion-dollar facilities.
Despite the significant capital outlays, the execution risk narrative is shifting rapidly.
Northland Capital Markets analysts recently validated this infrastructure transition, projecting that execution risk will sharply decline between 2026 and 2027 as project deliverables go online. The analyst also stated that significant multiple expansion was possible, pushing the valuation toward 15x as tangible cash flows materialize.
The broader analyst community agrees, maintaining a consensus price target of $67.67, which represents over 70% upside from current levels.
Institutional investors reinforce this bullish outlook, as the $7.02 million in shares sold in the last quarter is vastly overshadowed by the $94 million spent on purchases. While some corporate insiders recently executed structured selling programs, these distributions reflect standard equity compensation realization rather than a broader executive exodus.
Short interest remains at healthy levels, suggesting the recent price action is driven purely by fundamental repositioning.
The elevated beta of 5.69 for Applied Digital remains a lagging indicator, permanently tethered to its past life managing volatile cryptocurrency operations.
As the market digests the bond-like cash flow profile created by 15-year take-or-pay utility contracts, the equity will naturally re-rate. Institutional capital values the predictability of digital real estate multiples over the cyclicality of legacy bitcoin mining revenue.
Capturing Value Before the Walls Go Up
Shifting a multibillion-dollar business model from digital asset speculation to institutional real estate requires heavy capital deployment, and pricing volatility remains the admission price for early allocators. Applied Digital already holds the binding hyperscaler commitments necessary to support its corporate transition, shielding the balance sheet from some of the inherent cyclicality of the broader semiconductor and computing markets.
While current profitability metrics appear heavily depressed due to massive infrastructure investments, the forward-looking cash flows are supported by contracted hyperscaler leases rather than completed operations. The transition from construction to operation over the next 24 months will serve as the primary catalyst for sustained valuation expansion.
Investors may want to add Applied Digital to their watchlist, as the company is rapidly bringing its Delta Forge 2 and Polaris Forge 1 campuses online. Those with a higher risk tolerance might consider using the current debt-driven price volatility as an entry point before the broader market fully prices in the $36 billion contracted revenue backlog.
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