Inside Walmart: AI, drone expansion, and a steady consumer

Investing.com -- Walmart Inc. (NYSE:WMT) is continuing its push into advanced technology while maintaining a consistent focus on consumer behavior and affordability, according to analysts at Jefferies who recently met with CEO Doug McMillon during the company’s Associates Week in Arkansas.

At the center of the discussion was consumer demand, which McMillon described as steady. 

While February sales were softer than expected, March returned to normal patterns, and April benefited from a strong Easter season. 

The observation aligns with prior earnings commentary and supports a view of resilient shopper behavior despite broader economic uncertainty.

Jefferies analysts said the conversation also emphasized Walmart’s growing use of artificial intelligence to improve operations.

The company has been implementing what it calls "agentic AI," a system of interconnected AI agents tailored for specific tasks.

One application, a fashion merchandising tool, has reportedly cut production timelines by up to 18 weeks.

In customer support, AI systems are relieving associates of repetitive inquiries, allowing staff to shift to higher-impact roles.

AI is also making its way into consumer-facing features. Walmart is deploying an AI shopping assistant named Ask Sparky, aimed at enhancing the digital shopping experience.

Meanwhile, the company is exploring AI-driven search engine optimization strategies for its advertising business, which Jefferies sees as a potential margin driver in the long term.

Drone delivery is another area where Walmart is expanding. The company plans to roll out drone operations to five new cities, Houston, Tampa, Orlando, Atlanta and Charlotte, adding to its existing service in Dallas and Bentonville.

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With more than 150,000 drone deliveries already completed, Walmart has positioned itself as the first retailer to scale the technology across five U.S. states. The initiative reflects a broader effort to elevate convenience, a theme McMillon repeatedly underscored during the lunch.

Despite the growing tech focus, Walmart remains committed to its long-standing "Every Day Low Price" strategy.

Executives told Jefferies that affordability remains central to Walmart’s brand identity and that this pricing approach continues to resonate with customers.

Jefferies analysts also noted that management expects profit growth to outpace sales in the long run, driven by high-margin areas like advertising, memberships, fulfillment services, and data ventures. A stronger product mix, particularly an uptick in general merchandise, could further support margin expansion.

Investments in workforce development were also highlighted. Walmart’s average U.S. frontline hourly wage stands at approximately $18.

The company continues to promote training programs for roles such as private fleet drivers, opticians, and technicians.

These initiatives are part of a broader strategy to retain talent and improve upward mobility within the organization.

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