s and other membership clubs have been able to sell at razor-thin margins because they can fall back on membership fees to drive profit. Membership income is a big part of the mix, but there are also items like marketplace commissions, advertising and logistics that are starting to steal the show. Technology underpins a lot of it, and AI is getting to the forefront of profit planning, even in Bentonville.    Historically, it’s been rare for Walmart executives to go on a rave about technology: The company has been grounded in nuts and bolts real estate for the 60 years of its existence, and its leadership has always preferred to talk about things like price rollbacks and discount store conversions, dull, prosaic stuff that has zero glam but speaks the plain language its shoppers and investors prefer. Even when they talk about e-commerce, it’s always about how well and how quickly customers get served. That is now changing, with CEO Doug McMillon almost doing a stump speech about AI on Walmart’s August 21 investor call that coincided with the release of its second-quarter results.  One excerpt: “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.”  Sparky will become ‘agentic’ over time, McMillon says, a prospect that might get an ambivalent reception among Walmart’s bread-and-butter customers, who are interested in how Walmart can improve their lives, surely the overarching goal of any retailer. Indeed, this was clearly on the mind of analysts, one of whom popped the question about whether AI was having any impact on Walmart’s top line or margins. The answer from McMillon boiled down to a “not yet, but we’re excited about the possibilities”. Membership income continues to soar In the quarter ending July 31 (the second quarter of Walmart’s FY26), the company reeled in consolidated revenue of US$177.4 billion, an increase of 4.8 per cent, year over year (5.6 per cent adjusted for currency fluctuation). Gross margin edged up a fraction, to 24.5 per cent, and net after tax profit was US$7.2 billion, up 51.6 per cent, year on year. For the first six months of the financial year, the company’s revenues have risen by 3.7 per cent, to US$343.0 billion, and net profit is up by 17.7 per cent, to US$11.8 billion. The top line benefited from global e-commerce growth of 25 per cent. Membership income grew 15.3 per cent and advertising revenue grew by 46 per cent. The company’s fiscal year guidance of US$674.5 billion of net sales remains unchanged. Walmart US Walmart US (which doesn’t include domestic Sam’s Clubs), brought in revenues of US$120.9 billion, up 4.8 per cent and accounting for 69 per cent of total company revenues. Comparable-store sales for Walmart US increased 4.6 per cent, excluding fuel. Transaction counts and average transaction values both increased. Leading categories were groceries, health and wellness (up in the mid-teens), with general merchandise sales recovering somewhat from a weak first quarter and returning to the black. General merchandise is still deflationary despite tariffs. Indeed, the impact of tariffs has so far proven anticlimactic. McMillon told investors on August 21: “The way things have played out so far, the impact of tariffs has been gradual enough that any behavioural adjustments by the customer have been somewhat muted.” E-commerce grew rapidly, with store fulfillment rising 50 per cent and one-third of store-fulfilled orders being delivered within three hours. For Sam’s Club in the US, net sales were up 3.4 per cent, to US$23.6 billion, and represented 16.3 per cent of total US sales for the quarter. Comps were up 5.9 per cent excluding fuel. International: it’s membership income again Walmart International, including Sam’s Clubs outside the US, accounted for US$31.2 billion, or 17.7 per cent of total company sales, in the second quarter. Sales growth was 5.5 per cent and 10.5 per cent on a constant currency basis. China, Flipkart and Walmex were again the growth leaders.  Membership income is galloping and has increased by another 27 per cent, year on year. E-commerce sales were up by 22 per cent. However, although Walmart US and Sam’s e-commerce business is now profitable, the international segment continues to operate at a loss. China’s value-conscious consumer loves Sam’s Club Many eyes were on China again, where Sam’s Club and e-commerce are continuing to drive success in a very value-conscious marketplace. Year-on-year sales in China (on a constant currency basis) soared by more than 30 per cent, with combined assistance from eight new stores opened over the past 12 months, 39 per cent growth in e-commerce and 21.5 per cent same-store sales growth. The company is focused on rapid fulfilment and densification of the market is facilitating delivery speeds of less than an hour in many cases, and sometimes minutes. Two P&Ls? McMillon’s excitement about the new revenue streams is palpable: “Two P&Ls, the traditional store P&L, and then the new digital P&L, which has got marketplace, marketplace commissions, membership, advertising, all those kinds of things in it. And what we were pointing to is, we think that the second P&L over time can be more profitable than the first P&L and lift the total.” There is probably no other mainstream retailer in the world that has been able to transition its thinking and its strategies away so effectively from what made it great in the first instance. Its transformation from a store-based retailer to an omnichannel giant has been extraordinary. Now it is taking the step, with AI as a key driver. Recalling Alan Greenspan’s legendary quip, Walmart’s investors will be hoping that McMillon’s enthusiasm isn’t another case of “irrational exuberance”.