Microsoft missed the mobile wave and the social wave. But the boring enterprise kept making money. It now has >$100B in the bank. The money has bought them Github, LinkedIn, and most recently, OpenAI.

Moats are such. One strong cash cow gives you wildcard entry to several new games. Microsoft is cool again.

Walmart is the Microsoft of the retail world, in that they both are the old guards in their respective industries. What Microsoft is to enterprises is what Walmart is to low and middle income households.

Sam Walton not only built a company in his image but ensured that his successors came from the same mold. When the times are tough and wallets are shrinking, Walmart's core value proposition shines. Walmart was the most searched retailer online, on Black Friday. If Q3 results are any indication, even high income households are trading down to Walmart, spending money on groceries and are contributing to increased basket size. You can see this trend reflect in the increase in comparable store sales by 17.4% while transactions themselves grew only by 7.8%.

But Walmart as a stock has been pretty lacklustre for all of 2022. Net income has been erratic from the middle of the last decade.

Return on Assets has been average too.

If you are looking for a deep dive on metrics, here is a fantastic write-up by Luke M.

But a choppy macro-environment is what Walmart could thrive in.

1. Walmart can outcompete Meta and other social platforms with its retail media platform.
2. High income families are downshifting to Walmart, spending more money per transaction. If this continues, Walmart could have a good 2023 in terms of cash reserves.
3. While there is an attempt to control inflation, Blackrock just came out with a prediction that we will be in a persistent 'above normal' inflation environment for years to come. Businesses are going to procure better and cheaper. Walmart for Business, Commerce Technologies, and GoLocal (partnerships via Salesforce Commerce Cloud) all are directionally smart initiatives.

All these said, I am not sure if Walmart is in it's Microsoft 2.0 moment.

1. The downshifting of higher income household is a temporary phenomenon
2. The Salesforce partnership is new territory for Walmart but Salesforce CommerceCloud's installed base is less than 2000 companies. Would retailers need Walmart for their last mile, hyperlocal, order fulfillment tech?
3. Walmart Business is a recognition of the demand from businesses but not a new segment. It will bring incremental revenue and stickiness

But in a year where everyone from Amazon to Shopify is seeing a reset in their plans, Walmart could close in on the gap.

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